19/04/22

INTERNATIONAL TAX: US President Joe Biden ‘champions’ support for 15pc global tax deal.

As published on independent.ie, Tuesday 19 April, 2022.

US President Joe Biden is still “championing” a 15pc global corporate tax rate even as his administration bids to impose a 20pc rate for US multinationals.

“The president is championing a 15pc corporate minimum tax here and around the world to ensure that no large profitable corporation gets away with paying $0 in taxes,” the White House said in a statement to mark the day tax returns are filed in the US.

In comments aimed at Republican lawmakers, the White House said on Monday that “profitable corporations shouldn’t pay a lower tax bill than a middle-class family, and shouldn’t be able to avoid taxes by shipping jobs and profits overseas”.

In its draft 2023 budget last month, the Biden administration said it would hike the tax on US firms’ overseas income to 20pc, five points above the 15pc minimum agreed by 137 countries last year at the Organisation for Economic Cooperation and Development (OECD).

Under the OECD rules, firms with global turnover of more than €750m a year would have to pay 15pc tax on their worldwide profits. If they fail to pay enough tax in one country, they will have to top it up in another jurisdiction.

A parallel pillar of the deal shifts some taxing rights for the world’s 100 largest multinationals to countries where they make their sales, a move that could cut as much as €2bn a year from the Irish tax take, according to Government estimates.

US approval of the deal was already cast into doubt after Democratic senators pushed back against Mr Biden’s ‘Build Back Better’ spending plan.

Republican senators have also expressed fears that the new rules could see foreign countries snaffle domestic tax credits provided to US multinationals.

Last week the Department of Finance launched a consultation on how the OECD deal will interact with two key Irish tax credits.

It is seeking feedback from companies using the 25pc research and development (R&D) tax credit and the so-called knowledge development box, which lowers the corporate tax to 6.25pc for income from patent-protected goods and services.

Finance Minister Paschal Donohoe has obtained assurances from the EU that Ireland could continue to give R&D tax credits.