The world's 20 largest economies endorsed on Saturday a plan
for a global overhaul of corporate tax that would introduce a minimum tax rate
and change the way large companies like Amazon and Google are taxed, based
partly on where they sell their products and services rather than on the
location of their headquarters.
The reform, if finalised in October, would need
parliamentary approval in the more than 130 countries that support it,
including the US Congress where it could face opposition from the Republicans.
All EU member states must also approve tax reforms - including the envisioned
global deal.
In an attempt to eliminate one possible hurdle to the global
deal, the EU bowed to US pressure and said on Monday it would delay its own
plan for a separate levy on online sales, which the US administration had
feared could have led to more criticism of the global tax overhaul in the US
Congress.
"We have decided to put on hold our work on our new
digital levy," EU commission spokesman Daniel Ferrie told a news
conference in Brussels on Monday, noting the bloc will reassess the situation
in autumn. The tax proposal had been planned for later in July.
The announcement coincided with US Treasury Secretary Janet
Yellen's visit to Brussels and followed repeated pressure from her during a G20
summit at the weekend and before.
EU economics commissioner Paolo Gentiloni told journalists
postponing the bloc's plan would make it easier to concentrate on achieving
"the last mile" of the global deal.
However, there remain some holdouts against the global deal,
including three EU countries - Ireland, Hungary, and Estonia.
Ireland has said it cannot support the floor of 15 percent
for the global tax rate, which is intended to stop multinationals shopping
around for the lowest tax rate but would force Dublin to raise its 12.5 percent
rate, which has been instrumental in convincing several companies to make the
island their EU headquarters.
Yellen reiterated on Monday her call on all 27 EU countries
to join the global deal.
"We need to put an end to corporations shifting capital
income to low tax jurisdictions, and to accounting gimmicks that allow them to
avoid paying their fair share," she said in a statement.
But Irish Finance Minister Paschal Donohoe did not appear to
have changed his criticism of the reform. After a meeting with Yellen, his
spokesperson said he had repeated to her Ireland's support for the shift in the
way multinationals are taxed but its opposition to the 15 percent minimum rate.
Donohoe said, however, that Ireland was committed to the
process and was ready to engage in the coming weeks with the Organisation for
Economic Co-operation and Development (OECD) which is coordinating talks on the
global reform.
©Reuters
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