Treasury Secretary Janet Yellen has said that US multinationals that have spent years avoiding paying taxes on US soil will be forced to help finance improvements in educational, social and infrastructure programs, thanks to the historic global tax deal.
Speaking in Ireland, where 800 American companies are based, Yellen said the new global tax rate agreed by 136 OECD countries halted the “race to the bottom” in which multinationals scoured the world in search of the corporate tax rate. lower, without paying their debts to the populations that helped them earn billions each year in profits.
Joe Biden’s $ 1.75 trillion Build Back Better plan “spans a decade and is paid for through revenue collection, tax-free from working families … but partly because of this. [OECD] tax treatment asking companies to pay more, for corporations that are very profitable and can afford to contribute income ”.
He said the United States “needed to invest in people,” particularly in education, infrastructure and broadband, and said at an event in Dublin that America’s roads and bridges are collapsing and that the lack of broadband access also affected hard to many families during the pandemic. .
Some were forced to “drive to a parking lot outside McDonald’s so their children could do their homework and have Internet access,” he said.
She said: “I am proud of the new international tax agreement, because it not only provides benefits for ordinary families, but it will also stabilize the century-old international tax system.”
Yellen used the Institute of International and European Affairs in Dublin to praise Ireland, an implicit thanks for eventually giving in under pressure from the US to increase its 12.5% corporate tax rate and join the rate of the 15% of the OECD.
He added: “Importantly, the agreement ends the chaotic array of digital services taxes that have discriminated against Irish and American businesses.”
Ireland’s economy is highly dependent on American businesses. Sources recently claimed in interviews with The Guardian that Microsoft, Apple and Pfizer are responsible for 30% of the country’s total corporate tax collection, the equivalent of about 4 billion euros.
Although those three companies are heavily invested in the country and, in Pfizer’s case, have a substantial manufacturing base, they now face additional taxes at home as part of the new global tax regime.
Tax evasion schemes like the so-called “Dutch double Irish sandwich” that allowed companies like Google to funnel their huge revenues from Europe through Ireland and into zero tax havens in the Caribbean are now banned.
Yellen said on Monday that Ireland will remain one of the best places in the world for multinational companies to invest, even after Dublin gave up its prized 12.5% rate.
He said that while Ireland was viewed by some as a tax haven, “perception often lags behind reality” and that Ireland “was already winning this new race to the top, with its strong business environment.”
Yellen said: “Here is my honest assessment of what it will not do: it will not change the status of this country as one of the best places to do business in the world.”
George is Digismak’s reported cum editor with 13 years of experience in Journalism