Yellen of the United States says she will work to address the concerns of countries that have opted out of the tax pact.
US Treasury Secretary Janet Yellen said on Saturday that she would strive to resolve the concerns of holdout countries that have not signed on to a worldwide corporation tax pact, but noted that adoption by all governments was not necessary.
Yellen told reporters alongside German Finance Minister Olaf Scholz that she hoped some of Ireland’s, Estonia’s, and Hungary’s concerns might be resolved in the run-up to the G20 leaders’ summit in October.
“We will make every effort to do so, but I should emphasize that it is not necessary for every country to join,” she said.
“This agreement contains an enforcement mechanism that can be used to ensure that holdout countries do not undermine — that they do not use tax havens to undermine the operation of this global agreement.”
When asked how she planned to convince a divided United States Congress to support the accord, Yellen stated that she was collaborating with congressional tax-writing committees on a budget resolution that would employ budget “reconciliation” rules.
These rules would enable approval with a simple majority in the United States Senate, where Democrats currently enjoy a one-vote majority if all members of their party are aligned.
“I am very optimistic that the legislation will include the provisions necessary for the United States to comply with Pillar 2 of the Organisation for Co-operation and Development (OECD),” Yellen said, referring to the section of the OECD that oversees the minimum tax.
The Biden administration has suggested increasing the current US minimum tax on abroad intangible income to 21% and imposing a new minimum tax that would preclude firms from deducting tax payments to nations that do not have a minimum tax.
Yellen stated that the OECD tax pact, which was approved in principle by 131 nations and has now been endorsed by the G20, was beneficial to all governments and would increase revenue by putting an end to a “race to the bottom” in which countries competed to reduce corporate tax rates.