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U.S. proposes 15% tax on multinational corporations’ profits

Multinational Corporations’ Profits

The administration of US President Joe Biden has proposed to its partners in the Organization for Economic Cooperation and Development (OECD) to impose a tax of 15% on multinational corporations’ profits.

According to the US Treasury Department, negotiations are underway in the OECD, at the initiative of Washington, in order to impose taxes on multinational corporations’ profits at a specific rate, commensurate with the various countries.

The 36-nation organization is seeking to obtain a preliminary global agreement at the G20 Finance Ministry meeting next July 9-10, then in a final meeting in October. This is the first time that the United States has formally proposed a specific percentage.

Multinational corporations’ profits

So far, the rate of the tax  have been raised ranging between 12.5% ​​in Ireland and 21% supported by France, Germany and the European Parliament in particular.

The director of the organization’s center for tax policy and administration, Pascal Saint-Ammann, said on May 5: “Are we going to reach 21%? I doubt it. But will we reach close to 21%? I hope that is possible”.

This reform aims to put an end to tax competition between countries.

And if the negotiations in the OECD are successful, France will adopt, as it said, European directives on this issue in the first half of 2022 during the French presidency of the Union.

Funding an investment plan

The project was put forward by the Biden administration, which seeks to increase corporate taxes to fund a massive investment plan.

In addition to a global minimum rate, this amendment, which is being negotiated in the OECD, provides for the corporation tax to be determined according to the profits it makes in each country, regardless of its tax location.

This second point targets digital companies that pay taxes that often have nothing to do with the revenues and profits they achieve locally.

OECD is an international organization that aims at economic development and the revitalization of trade exchanges. The organization consists of a group of developed countries that accept the principles of representative democracy and a free market economy.

It was established on September 30, 1961, after replacing the Organization for European Economic Cooperation (OEEC), which was established in 1948 to help manage the Marshall Plan for the reconstruction of Europe after World War II.

Keep reading: Biden Administration Proposes New Global Tax System For Multinational Corps

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