Countries could claim the right to tax part of
their profits — under a proposal backed by the
Group of Seven wealthy democracies, up to
20% of the profits of companies above a profit
margin of 10%. Governments would have to roll
back their unilateral taxes, defusing the trade
disputes with the U.S.
BIDEN’S PLANS
The OECD talks play a role in Biden’s push for
changes that would, in his view, make the tax
system fairer and raise revenue for investments
in infrastructure and clean energy. The U.S.
already passed a tax on foreign earnings under
the Trump administration. But Biden wants to
roughly double the Trump era rate to 21%, and
also to charge that rate on a country-by-country
basis so that tax havens can be targeted. The
president also seeks to make it more difficult for
U.S. companies to merge with foreign firms and
avoid U.S. taxes, a process known as inversion.
All those changes must be approved by the
U.S. Congress, where the Democratic president
has only a thin majority. Biden wanted a
diplomatic win at the OECD talks so that other
countries impose a form of a minimum tax
to prevent companies from avoiding their
potential tax obligations.