Ireland, loved by Biden, is obstacle to tax deal

One of the countries that poses a major obstacle in the push toward a global minimum tax rate has deep ties to President BidenJoe BidenBiden DOJ adopts Trump’s liability stance in E. Jean Carroll defamation suit Boston mayor fires city’s police commissioner months after domestic abuse allegations emerge Book claims Trump believed Democrats would replace Biden with Hillary Clinton or Michelle Obama in 2020 election MORE.

Ireland, a tax haven for many household name companies, would lose out if major industrial countries move forward with plans to subject multinational corporations’ income to a tax rate of at least 15 percent.

Finance officials in the wealthy Group of Seven (G-7) countries, which does not include Ireland, backed a global minimum tax rate of at least 15 percent in a deal announced over the weekend. The agreement is a win for the Biden administration, but many challenges remain before any international tax deal is finalized by a larger group of countries.

“This effort is far from over,” Treasury Secretary Janet YellenJanet Louise YellenOn The Money: White House sees paths forward on infrastructure despite stalled talks | Biden battles Dem divides | FBI seizes bitcoin ransom paid by Colonial Pipeline Yellen says higher interest rates would be a ‘plus’ Yellen: No signs yet of unsustainable wage increases MORE said during a press conference Saturday after the G-7 finance ministers met in London.

More than 100 countries are participating in international tax negotiations at the Organization for Economic Cooperation and Development (OECD), a group that includes Ireland. Part of those negotiations are focused on establishing a global minimum tax.

“I look forward now to engaging in the discussions at @OECD. There are 139 countries at the table, and any agreement will have to meet the needs of small and large countries, developed and developing,” Irish Finance Minister Paschal Donohoe said Saturday on Twitter after the G-7 announcement.

Donohoe, who met with Yellen during the G-7 finance ministers’ meeting, told The Irish Times that in their talks he “continued to make the case for legitimate tax competition within certain boundaries and for the role of small- and medium-sized economies in the agreement that is yet to come.”

A global minimum tax rate of 15 percent would have a significant impact on Ireland and its 12.5 percent rate, making it an attractive country for many multinational companies to set up offices.

The pushback from Ireland could also strain relations with a country beloved by Biden. The president, who is often outspoken about his Irish heritage, has already met with Ireland’s prime minister, Micheál Martin, since taking office.

During the virtual meeting on St. Patrick’s Day, Biden reaffirmed U.S. support for the 1998 Good Friday Agreement that ended the conflict in Northern Ireland.

But the Biden administration also has made it a top priority to reach an OECD agreement on a global minimum tax, viewing such a deal as a way to ensure American companies won’t become less competitive if the U.S. raises its corporate tax rates. Biden has proposed paying for his infrastructure plan in part by increasing the corporate tax rate from 21 percent to 28 percent and by increasing an existing minimum tax on U.S. companies’ foreign earnings to 21 percent.

On Saturday, the G-7 finance ministers issued a statement expressing commitment for a global minimum tax rate of at least 15 percent, the rate the Treasury Department pitched to OECD negotiators last month. The United States, Canada, France, Germany, Italy, Japan and the United Kingdom comprise the G-7.

The Biden administration lauded the G-7 finance ministers’ announcement as historic and said a global minimum tax would encourage countries to compete for businesses based on factors other than taxes.

“The G-7’s endorsement is another example of America reasserting its leadership on the world stage,” White House press secretary Jen PsakiJen PsakiDemocrats reach turning point with Manchin The Memo: Political winds shift against Biden Overnight Energy: Climate emerges as infrastructure sticking point | US recovers millions in cryptocurrency paid to pipeline hackers | Chief scientist: NOAA is ‘ billion agency trapped in a .5 billion budget’ MORE said during a press briefing Monday.

Jake SullivanJake SullivanOvernight Defense: Supreme Court declines to hear suit challenging male-only draft | Drone refuels Navy fighter jet for the first time | NATO chief meets with Austin, Biden Biden invites Ukraine’s president to the White House The Hill’s 12:30 Report – Presented by Facebook – Dems face unity challenge in chaotic June MORE, Biden’s national security adviser, said during the same briefing that Biden and other G-7 leaders would endorse a global minimum tax of at least 15 percent at a summit this week in the United Kingdom.

An agreement on a global minimum tax wouldn’t require countries to raise their corporate tax rates. Rather, it would encourage countries to have mechanisms to ensure that their companies are paying a minimum level of tax on their foreign earnings.

Still, there are hurdles to a global minimum tax becoming a reality.

Negotiators are hoping for a political agreement at the Group of 20 (G-20) finance ministers meeting next month in Italy and for the OECD to finalize an agreement in the fall. But a number of countries outside the G-7 have raised concerns, including countries such as Ireland and Hungary that have corporate tax rates below 15 percent. Ireland is part of the European Union, which is a member of the G-20.

Yellen in her Saturday press conference noted that there are some countries with concerns and that countries will be working on some of the specifics of an agreement ahead of next month’s G-20 meeting.

“This isn’t a finished agreement,” she said. “There are details still to be worked out.”

Yellen said that she hopes the G-20 endorses an agreement and that many countries participating in the OECD negotiations will sign on to an agreement if it’s backed by the G-20. But she also noted that an agreement would include an enforcement mechanism that would “essentially put pressure” on countries that don’t adopt the agreement to abide by a minimum tax.

In addition to concerns by some countries, there are other hurdles to both a deal and implementation. For example, countries will need to reach an agreement on the tax base for a global minimum tax.

“There is a lot of serious policy and technical work to be done for this to actually work,” said Daniel Bunn, vice president of global projects at the Tax Foundation.

Some following the negotiations closely expressed optimism about a G-20 agreement.

“I think it’s got a pretty good shot,” said Maury Peiperl, dean of the George Mason University School of Business, pointing to the decline in corporate tax rates over the past several decades and the need for a correction.

Along with the efforts on a global minimum tax, the OECD is also working on an agreement about the location of where large corporations’ profits are taxed. The OECD is aiming to reach a deal on both issues at the same time.

Once an agreement is finalized by OECD negotiators, countries will need to update domestic laws, and likely also tax treaties, in order to implement a deal. Congress would be involved in U.S. implementation.

The chairmen of Congress’s two tax-writing committees — Sen. Ron WydenRonald (Ron) Lee WydenTrump DOJ seized phone records of New York Times reporters Top union unveils national town hall strategy to push Biden’s jobs plan Senate Democrats urge Google to conduct racial equity audit MORE (D-Ore.) and Rep. Richard NealRichard Edmund NealBottom line On The Money: Inside Biden’s T budget | Key inflation metric higher than expected ‘SECURE 2.0’ will modernize retirement security for the post-COVID American workforce MORE (D-Mass.) — said in a statement that they look forward to reviewing the G-7 deal and “applaud the Biden Administration’s leadership in working to level the international playing field and support American workers.”

But the top Republicans on the committees — Sen. Mike CrapoMichael (Mike) Dean CrapoUSTR announces suspended tariffs on six nations after probes into digital taxes McConnell returns as Senate ‘grim reaper’ Senate reaches deal to get out of town after Jan. 6 commission vote MORE (Idaho) and Rep. Kevin BradyKevin Patrick Brady’SECURE 2.0′ will modernize retirement security for the post-COVID American workforce Despite Biden’s strong start, Democrats are worried Biden administration launches trade dispute against Canadian dairy industry MORE (Texas) — expressed some reservations, saying in a statement that “it remains to be seen whether any agreement will result in consensus from the United States’ biggest foreign competitors.”

Crapo and Brady added that they “continue to caution against moving forward in a way that could adversely affect U.S. businesses, and ultimately harm American workers and jobs at a critical time in our country’s economic recovery.”

Click Here: cheap gold coast titans jerseys