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Global Corporate Minimum Tax Deal Faces Lone E.U. Holdout and Looming U.S. Midterms

By:
Ruth Singleton
Published Date:
Jun 9, 2022

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It was nearly a year ago that the White House announced that 130 countries expressed support for a 15 percent global minimum corporate tax at a meeting of the Organization for Economic Cooperation and Development (OECD). The proposed global minimum tax agreement is intended to discourage multinational corporations from taking advantage of differential rates from jurisdiction to jurisdiction. While it had been discussed several times before over the years, Treasury Secretary Janet Yellen  breathed new life into the idea.  

Now Poland is the lone holdout to the European Union unanimously adopting the agreement, after Sweden, Estonia and Malta withdrew their objections in April, Accounting Today reported. Poland and the EU have been negotiating, so there could be some movement at the next meeting of the EU, scheduled for June 12. 

In the United States, the agreement would need to be ratified by Congress, either as legislation or as a treaty. A treaty would need approval by two-thirds of the Senate, but even as legislation, the Senate would present a hurdle, as it would have to be approved via the reconciliation process or face a filibuster. 

Accounting Today, quoted Todd Simmens, technical practice leader of tax policy and legislation at BDO USA, who said, “I don’t think reconciliation will happen any longer before the November midterm elections, so it would have to be a standalone tax bill which would be subject to filibuster. So, it comes down to whether there are enough days left on the calendar and is there enough interest in doing it? There are other priorities, there are recesses and it’s an election year. I think there is enough support for the policy behind the agreement, but the question is whether Congress can get its political act together to do something.” 

Simmens noted that the global agreement could help offset revenue losses from the Tax Cuts and Jobs Act.  “The TCJA is a net revenue loser according to the Joint Committee,” he said, adding that adopting the global minimum tax would increase U.S. revenue by $100 billion.” 

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