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EU supports Yellen’s proposal to set a global minimum corporate tax rate | Economy


US President Joe Biden with Treasury Secretary Janet Yellen.
US President Joe Biden with Treasury Secretary Janet Yellen.Patrick Semansky / AP

The European Commission has shown this Tuesday its confidence that the recent statements by the Secretary of the Treasury of the United States, Janet Yellen, in favor of a minimum taxation for companies at a global level, will facilitate an agreement to be reached this summer on the matter in the within the OECD. “We hope that Secretary Yellen’s statements (…) will give new impetus for a consensual solution this summer,” said the economic spokesperson for the Community Executive, Daniel Ferrie, who recalled that the taxation of the digital economy is of “Top priority” for Brussels. The governments of Spain, France or Germany have also spoken in favor of this measure, individually, and the IMF itself has supported the proposal.

The confidence of the European authorities is based both on Yellen’s statements in favor of a minimum level of taxation at the global level on companies and on the fact that the new Joe Biden administration has withdrawn from the negotiations the requirement that some companies could fall outside the global rules. Ferrie took the opportunity to recall that “the credibility” of the negotiations depends on all partners “working together” to achieve a “political” agreement, for which he has urged all parties involved to “remain committed to the talks.”

In addition, he stressed that the Community Executive is “committed” to guaranteeing that multinationals pay a “fair” share of taxes wherever they generate profits and have recalled that it will resume its plans for a European tax if the OECD negotiations do not come to fruition. port.

On Monday, Yellen had insisted on Biden’s proposal to approve a global minimum tax level for companies, so as to avoid the “race” to the bottom in corporate tax that currently exists. For the former Fed president, credibility abroad “begins with credibility at home.” “We are working with the G20 countries to agree on a minimum corporate tax rate at a global level that can stop the race to the bottom,” he argued. The Secretary of the Treasury has defended that a minimum rate at a global level for companies can be used so that the economy “develops” with more equal opportunity in the taxation of multinational companies and that “stimulates innovation, growth and prosperity” .

The same International Monetary Fund (IMF), which this Tuesday has released its forecasts in the report World Economic Outlook, has been in favor of the possibility of establishing a minimum tax at the global level to tax the profits of corporations, as indicated by the chief economist of the international institution, Gita Gopinath. “We have long been in favor of a minimum corporate tax at the global level,” Gopinath said in the press conference after the report was published, reiterating the important concern of tax evasion and avoidance.

The IMF chief economist has avoided offering a specific figure on what would be the appropriate minimum levy in the IMF’s opinion, limiting herself to pointing out that it is a question that the institution “is studying.” “Governments will have to rebuild their fiscal positions after the crisis and for that measures will be necessary,” he said. In its report, the Fund defends that fiscal space can be generated through measures that not only increase income but also improve progressivity, either by increasing taxes on the richest people and highly profitable corporations that have been seen relatively less affected by the pandemic, thus closing internal fiscal loopholes, reducing tax expenditures, and improving revenue management.

Supports

The Spanish president, Pedro Sánchez, also applauded Yellen’s proposal to create a globally harmonized corporate tax, considering, as stated in his appearance on Tuesday, that it is an issue included in “the progressive agenda” of the coalition government formed by PSOE and United We Can. Sánchez stressed the need to open this type of debate. “It is essential on a global scale that we address two fundamental elements: that linked to a minimum rate in corporate tax and, secondly, the imposition of large digital platforms.”

“These are two very important debates,” said Sánchez, who recalled the work carried out by Spain both in the G20 and in the OECD and the EU to advance in the harmonization of corporation tax. In this sense, he referred on the one hand to digital platforms to point out that “in recent months, as a result of the pandemic, they have greatly revalued their market capitalization” and that “they compete in unequal conditions with respect to other companies that do they pay their taxes ”. In addition, referring to the EU, he criticized that “some countries have much lower corporate taxes” than Spanish, and that therefore “there is competition that has to be corrected.”

The French Finance Minister, Bruno Le Maire, has spoken along the same lines. “We welcome US support for a minimum corporate tax,” he told Reuters on Tuesday, adding that he also intends to move forward with Yellen in international talks to rewrite cross-border tax rules for digital companies. “A global agreement on international taxation is now within our grasp. We must seize this historic opportunity, “he added.

German Finance Minister Olaf Scholz, for his part, declared that Yellen’s proposal represents a “great step forward” and predicted that a global agreement could be reached already this year. “I am confident in our ability to end this bad trend,” he said.


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