In effect, the Trump administration had earlier introduced the concept of a global minimum tax in 2017, which took the form of a Global Intangible Low-Taxed Income , taxing foreign profits at the rate of 10.5 per cent, in a bid to discourage US companies from parking profits overseas.
Mr Biden will find support among his party. For a long time, many Democrats have been calling for higher taxes to be imposed on corporates, a sharp contrast to the Trump Administration’s approach of lowering taxes on corporates in the hopes of stimulating reinvestment, innovation and productivity.The best commentaries and analysis to better help you see beyond today’s news headlines. Subscribe to CNA’s Commentary newsletter.This service is not intended for persons residing in the EU.
The Organisation for Economic Cooperation and Development has been working with the G20 countries on a new set of cross-border tax rules for a number of years to combat tax-planning strategies used by some multinational corporations to avoid taxes. Among them include tackling “shifting” profits from higher-tax jurisdictions to lower-tax jurisdictions under the Base Erosion and Profit Shifting Project since 2013.The latest round of proposals, hailed as BEPS 2.
But all is not smooth-sailing where Mr Biden should expect some domestic resistance in the US Congress as well as a pushback from parts of the international community That discomfort may be shared globally, given that early indications from OECD talks are looking at a more modest 10 per cent or 12.5 per cent, a rate that coincides with Ireland’s corporate tax rate.
Other investment hub locations such as Hong Kong, Ireland and Switzerland will be similarly impacted.In fact, a global minimum rate of 21 per cent proposed by the US will be disastrous for Singapore given its current corporate tax rate of 17 per cent.
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