By Doug Connolly, MNE Tax
Negotiations on a global minimum tax on corporations have the momentum that they need to reach an agreement now that France, Germany, and others have signaled support for recent US proposals, according to Pascal Saint-Amans, Director of the OECD Centre for Policy and Administration.
Speaking virtually at an April 30 International Tax Policy Forum conference, Saint-Amans said that opponents of the minimum tax, like Ireland, will ultimately have to get on board for the agreement or else will face measures that will top off their lower tax rates.
Saint-Amans also suggested that the Chinese government’s reservations on a minimum tax agreement are surmountable.
Reviewing the prospects for an agreement under the OECD’s “Pillar Two” talks on a minimum tax, Saint-Amans said there is “a very high likelihood that we get a strong Pillar Two by year-end.” While he has previously expressed optimism about an agreement on a global minimum tax, the tone has strengthened just in the past week.
During the course of the week, France and Germany, among others, signaled their support for the US proposal under Pillar Two. Meanwhile, President Biden delivered an address to Congress that, among other things, criticized corporations’ use of tax havens to avoid paying taxes.
Although Saint-Amans reiterated his position that not every country needs to agree to a minimum tax to implement a global agreement on it, he acknowledged that the agreement cannot have “big loopholes” that create risks of inversions by corporations in the US or other countries that are party to the agreement. However, he downplayed the risk of such loopholes.
He listed several reasons why he believes the minimum tax agreement will move forward on a broad scale. For one, he believes there are a lot of countries interested in such an agreement, as some countries’ government officials have already acknowledged their support.
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