WASHINGTON, Oct. 10 (Reuters) – Treasury Secretary Janet Yellen on Sunday said she was confident the U.S. Congress would approve legislation to implement the global minimum corporate tax agreed to by 136 countries.
Yellen told ABC’s “This Week” that measures to bring the United States into compliance with the global minimum tax would likely be included in the so-called reconciliation budget bill containing the spending initiatives proposed by President Joe Biden.
When asked if she was convinced the measure would be passed, Yellen replied, âYes. I am convinced that what we need to do to comply with the minimum tax will be included in a plan for reconciliation. I hope we will. be adopted and we can reassure the world that the United States will do its part. “
The parliamentary maneuver known as budget reconciliation would allow Democrats to act without Republican votes.
A group of 136 countries on Friday set a minimum global tax rate of 15% for large businesses and sought to make it harder for them to avoid tax in a landmark deal that Biden says leveled the playing field. Read more
Yellen did not explain how to implement another part of the deal that aims to overhaul the taxation of big tech companies and other highly profitable multinational companies.
The so-called “pillar 1” part of the tax agreement would reallocate the taxing rights of companies generating more than $ 20 billion in annual revenue to countries where their products and services are sold for 25% of profits above a 10% margin.
Republicans in the US Senate argued that this would require a new international tax treaty that would require ratification with a two-thirds majority of the Senate.
Republican senators told Yellen in a letter that they feared the Biden administration was considering bypassing the need to gain Senate authority to implement treaties.
Under the US Constitution, the Senate must ratify any treaty by a two-thirds majority, or 67 votes. Biden’s fellow Democrats control just 50 seats in the 100-member chamber. In recent years, Republicans have been overwhelmingly hostile to treaties and have supported corporate tax cuts.
Yellen said during a Senate Banking Committee hearing in late September that the administration was instead considering other ways to amend existing bilateral tax treaties that would avoid a two-thirds majority vote.
Yellen said she believed the reallocation of taxing rights for large multinationals would have some bipartisan appeal, as the deal would replace taxes on digital services that have been imposed by some countries on companies such as Facebook, Google, Amazon and Apple.
She said the United States’ implementation of this part of the deal may not take place until 2022.
Reporting by David Lawder and Doina Chiacu; Additional reporting by Patricia Zengerle; Editing by Lisa Shumaker and Chizu Nomiyama
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