U.S. backs a 15 percent global minimum tax on big companies as it tries to enlist other countries.

The Biden administration proposed a global tax on multinational corporations of at least 15 percent in the latest round of international tax negotiations, Treasury Department officials said on Thursday, a lower-than-expected offer as the U.S. looks to reach a deal with countries that fear hiking their rates will deter investment.

Treasury has been holding meetings this week with a panel of negotiators from 24 countries about the so-called global minimum tax, which would apply to global companies regardless of where they locate their headquarters. The Biden administration hopes to reach an agreement in principle with other countries this summer and is counting on the deal to help sell its plan to raise the corporate tax rate in the United States to 28 percent from 21 percent.

Treasury officials said their offer was met enthusiastically and characterized it as a pivotal moment in the negotiations, which have dragged on for more than two years. The negotiations over the global minimum tax are part of a broader global fight over how to tax technology companies and come as the Biden administration is trying to fix provisions in the tax code that it says incentivizes moving jobs overseas.

As part of its American Jobs Plan, the Biden administration called for doubling the global intangible low-taxed income (or GILTI) tax to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the United States. Under the plan, the tax would be calculated on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system.

Article source: https://www.nytimes.com/2021/05/20/business/economy/global-minimum-tax-corporations.html