The most ambitious of the century when the Organization for Economic Co-operation and Development, which oversees global negotiations, said the proposed rules on how the world’s largest companies would be taxed would not be revealed until the middle. Tax review faced a new setback on Monday next year.
This delay is expected to postpone the enactment of the agreement intended by next year until at least 2024. 15% tax in over 130 countries.
However, as concerns about inflation and the global recession grow and many countries, including the United States, are elected, it could give the government more time to consider withdrawing from the agreement.
“It is important to balance the political interest in rapid implementation with the need to properly complete the design of innovative new rules intended to last for decades,” said the OECD Secretary-General. One Matthias Corman said Written in a report to the Minister of Finance Of a group of 20 countries meeting in Indonesia this week.
The tax treaty signed in October last year aims to end the international battle over how to raise taxes on many large companies and how to tax technology companies. The architect said he would end the global “race to the bottom” of corporate tax rates.
The two-sided approach requires countries to set a minimum tax of 15%. This means that no matter where the store is located, the company will pay at least that amount of tax on global profits. It will also allow governments to tax the world’s largest and most profitable businesses, not by where they are based, but by where their goods and services are sold.
Both parts of the agreement are stuck.
The OECD delay is related to the challenges faced by negotiators in understanding how to redistribute tax rights across countries.
“We will continue to work as quickly as possible to complete this task, but it will also take as long as it takes to get the rules right,” Corman said in a statement. “These rules will shape our international tax arrangements over the next few decades. It’s important to get them right.”
Global minimum tax enactment faces obstacles in the United States and Europe.
Hungary has prevented the European Union, which requires unanimous support from its member states, from enacting a minimum tax of 15 percent. Previously, Poland temporarily withdrew its support for the deal.
In the United States, the Biden administration planned to enact tax reforms through a wide range of climate and economic packages that the Democratic Party wanted to pursue in line with the party’s policies last year. But that proposal has largely collapsed, and the Treasury instead includes the changes needed to make the United States compliant with the agreement in a narrower spending bill that Democrats want to pass this summer. I was hoping for that.
The Treasury did not immediately comment on the recent delays.
