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Yellen: U.S. Can't Sign Global Tax Treaty in Time to Prevent Levies from Other Countries

S.J. Steinhardt
Published Date:
Oct 17, 2023


The United States will be unable to sign a treaty on a global minimum corporate tax—one that it had a large role in bringing to fruition—in time to uphold a deal that prevents other countries from imposing new levies on some of the largest U.S technology companies. Treasury Secretary Janet Yellen made that announcement after a meeting with E.U. finance ministers, Accounting Today and Politico reported.

Although "much of the treaty has been agreed to, there are some matters that are important to the United States and other countries that remain unresolved, open issues that still must be resolved before the treaty can be signed," Yellen said, according to Politico. "So these processes will take into next year."

The agreement of more than 130 countries to require companies headquartered within their borders to pay a minimum tax rate of at least 15 percent in each of the nations in which they operate was aimed at reducing opportunities for tax avoidance. Yellen called for the tax in an April 2021 speech, and the United States played a large part in winning over the countries, which was brokered by the Organisation for Economic Cooperation and Development (OECD), but the proposed legislation codifying this into American law could not pass Congress.

Last week, the OECD released a legal text that sets out who can tax the profits of the world’s biggest corporations, including American tech companies such as Google and Facebook, Bloomberg reported. The United States needs to sign the treaty by the end of 2023 to prevent some countries from imposing taxes on such companies. Politico reported that if other countries began to impose taxes against those tech companies, that could trigger retaliation from Congress.

At least 30 countries that make up 60 percent of targeted global companies need to sign a multilateral convention (MLC) for this agreement, known as Pillar One, to go into effect.

"In the U.S. it has been circulated for comment for the next 60 days," Yellen said, according to Accounting Today. "It's critically important for a treaty of this level of importance and complexity to show it to the American public, to Congress, to the business community."

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