Global tax deal headed down a perilous path in Congress

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WASHINGTON – A complex international tax deal that took years to conclude is soon facing one of its toughest tests: the US Congress.

The group of 20 major economies backed the plan this weekend in Venice, Italy, after previous approval from a broader group of 130 countries. The plan, which aims to reduce corporate tax evasion, aims to renew long-standing international rules that are essential to President Biden’s plans to increase corporate taxes.

“The world is ready to end the global race to the bottom on corporate taxation, and there is broad consensus on how to do that,” Treasury Secretary Janet Yellen said.

As detailed negotiations continue, other countries will be looking to see if US lawmakers implement a minimum corporate tax of at least 15% and adopt new rules to divide the power to tax the largest corporations. Congress will look back, and watch how quickly other states set a minimum tax and remove the one-sided taxes on digital businesses that have drawn bipartisan opposition in America.

“The rest of the world is very aware that the administration cannot compel Congress,” said Chip Harter, the Trump administration’s chief international tax negotiator, now at PwC LLP. “They are watching closely.”

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