Finance officials in the Group of 20 (G-20) on Saturday endorsed “key components” of a framework for an international tax overhaul that is a top priority of the Biden administration.
The G-20 finance ministers and central bank governors announced their backing of major elements of the Organization for Economic Cooperation and Development’s (OECD) tax framework following a meeting in Venice, Italy. The framework calls for a global minimum tax for corporations of at least 15 percent.
“After many years of discussions and building on the progress made last year, we have achieved a historic agreement on a more stable and fairer international tax architecture,” the G-20 finance officials said in a statement.
The statement from the G-20 — a group of major economies that includes the U.S. — comes after more than 100 countries in the OECD released a statement earlier this month in support of a global minimum tax of at least 15 percent. The G-20 countries were among those that signed onto the OECD statement.
The G-20 and OECD have been working for several years on international tax issues and are hoping to finalize a detailed implementation plan in October. A final agreement will include more details about the tax rate and base for a global minimum tax. In addition to the discussions on a global minimum tax, the OECD and G-20 are also working on a framework related to the location of where corporate profits are taxed.
The international tax proposal will “grant greater tax certainty and stop the race to the bottom with respect to corporate tax rates,” Italian Finance Minister Daniele Franco said during a news conference.
He said “additional work is necessary” between now and October to “fully finalize” the agreement and iron out technical details.
A deal on a global minimum tax would not require countries to raise their corporate tax rates. Instead, it would incentivize countries to implement mechanisms aimed at ensuring that corporations pay at least a minimum rate on their income.
An agreement on a global minimum tax is a major goal of Treasury Secretary Janet Yellen.
The Biden administration has argued that a deal would help to prevent American companies from becoming less competitive if the U.S. raises its corporate tax rate, as the president has proposed. The administration is pushing for the minimum tax rate in the final agreement to be higher than 15 percent.
“This weekend’s G20 meetings were further confirmation: The world is ready to end the global race to the bottom on corporate taxation, and there’s broad consensus about how to do it – with a global minimum tax of at least 15 percent,” Yellen said in a statement Saturday.
Republicans have raised concerns about an international tax deal, signaling that the Biden administration could face challenges in getting Congress to implement any final agreement. They are concerned that a deal on a global minimum tax could advantage foreign countries over the U.S. They are also worried that countries may still try to impose digital services taxes, which would affect U.S. tech companies, even with a deal in place.
Jordan Williams contributed.