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“For the United States, this will be a fundamental shift in the way we compete in the global economy,” said Yellen. “No competition based on the lowest tax rates, but rather on the skills of our employees, our ability to innovate and our fundamental talents.”
Politics continues to concern itself with what the worldwide minimum tax rate will be and what exactly will be subject to the tax.
A separate proposal provides an additional tax for the largest and most profitable multinationals that have a profit margin of at least 10 percent. Officials want to apply this tax to at least 20 percent of profits in excess of that 10 percent margin for these companies, but they continue to debate how that revenue should be shared among countries around the world. Developing countries urge to ensure they get their fair share.
Mr Bradley of the Chamber said the details of a definitive agreement would determine how criminal it would be for businesses. Google and Facebook officials contacted senior Treasury officials during the process.
American companies also fear being penalized by a 21 percent tax proposed by President Biden on their overseas profits if their foreign competitors only pay 15 percent. The Biden administration also wants to raise the domestic corporate tax rate from 21 percent to 28 percent. The Democrats in Congress are pushing legislation to make these changes to the tax law this year.
“When a US company tries to compete globally with a significantly higher tax burden due to this significantly higher minimum tax on its business activities, this is a competitive factor in order to be successful,” said Barbara Angus, Global Tax Policy Leader at Ernst & Jung.
Washington and Europe continue to disagree on how digital giants like Google and Amazon should be taxed.
At the G20 summit, finance ministers were optimistic that such obstacles could be overcome. In his final press conference after the agreement, Italian Finance Minister Daniele Franco welcomed the agreement as historic and urged the countries that had not yet joined to reconsider it.
“Accepting global rules is difficult for any country. Every country has to be ready to compromise, ”said Franco. “Having global rules for taxing multinational corporations and taxing the profits of large corporations is a big change, a great achievement.”
Liz Alderman contributed coverage from Paris, and Eshe Nelson from London.