U.S.’s Yellen says will try to address concerns of tax deal holdout countries

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Economy9 hours ago (Jul 10, 2021 05:10AM ET)

© Reuters. U.S. Secretary of the Treasury Janet Yellen arrives to attend the G20 finance ministers and central bank governors’ meeting in Venice, Italy, July 9, 2021. G20 Italy/Handout via REUTERS

VENICE, Italy (Reuters) – U.S. Treasury Secretary Janet Yellen said on Saturday that she would work to try to address the concerns of holdout countries that have not signed onto a global corporate tax deal, but added that it wasn’t necessary for all nations to adopt it.

Speaking to reporters alongside German Finance Minister Olaf Scholz, Yellen said she believed that some of the concerns of countries such as Ireland, Estonia and Hungary could be addressed in the run-up to a G20 leaders’ summit in October.

“We’ll be trying to do that, but I should emphasise it’s not essential that every country be on board,” she said.

“This agreement contains a kind of enforcement mechanism that can be used to make sure that countries that are holdouts are not able to undermine — to use tax havens that undermine the operation of this global agreement.”

Asked how she would bring a divided U.S. Congress on board with the agreement, Yellen said she was working with the tax-writing committees in Congress on a budget resolution that would use budget “reconciliation” rules.

These rules would allow passage with a simple majority in the U.S. Senate, where Democrats hold a one-vote majority if all members of their party are aligned.

“I’m very optimistic that the legislation will include what we need for the United States to come into compliance with Pillar 2,” Yellen said, referring to the part of the Organisation for Co-operation and Development (OECD) that governs the minimum tax.

The Biden administration has proposed raising the existing U.S. minimum tax on overseas intangible income to 21% and instituting a new minimum tax that would deny deductions for companies making tax payments to countries that do not adopt the minimum tax.

Yellen said the OECD tax deal, agreed in principle by 131 countries and now endorsed by G20 governments, was good for all governments and would raise revenues by ending a “race to the bottom” with countries competing to cut corporate tax rates.

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