The Organization for Economic Cooperation and Development (OECD) is close to reaching agreement among nearly 140 countries on a global tax overhaul to address how “consumer-facing” digital giants like Apple, Facebook, Google and Twitter are taxed in countries where they have users.
The tentative agreement now has the backing of 134 countries involved in the digital tax negotiations, with six remaining countries holding out: Estonia, Hungary, Ireland, Kenya, Nigeria and Sri Lanka.
The OECD wants to finalize the agreement by October and implement it by 2023. The plan gained considerable steam after Biden administration officials negotiated a compromise that would apply new global tax rules to no more than 100 large multinational corporations. The plan would set a minimum tax rate of at least 15% to prevent companies from relocating to low-tax havens and establish a system for sharing some of the profit imposed from taxing large multinationals based on where they operate and not where they’re headquartered.
If an agreement is reached this year, the U.S. could need bipartisan support in the Senate to approve U.S. cooperation. Sen. Mike Crapo (R-ID), ranking member on the Senate Finance Committee, sent a letter to Treasury Secretary Janet Yellen in June seeking assurances that the Biden administration would not support any OECD plan that discriminates against U.S. companies.
Over the summer, Yellen said she remains hopeful that Republican lawmakers can support the deal.
“I’m not in agreement with the Republicans, but nevertheless I think it’s important for me to explain to them what the logic of this agreement is and why I see it as in the U.S. interest,” Yellen said.
This article was provided to OSAP by ASAE's Power of A and Inroads.