Treasury Secretary Janet Yellen said Monday she is working with the most influential countries around the world to end the “race to the bottom” in corporate tax rates.
“We are working with G-20 nations to agree to a global minimum corporate tax rate,” that can stop this race, Yellen said in a virtual speech to the Chicago Council on Global Affairs.
The U.S. wants to end the tax games that are used by U.S. companies to reduce taxes, create inversions or claim tax havens as their residence, a Treasury official said.
U.S. tech and pharmaceutical companies have been aggressive in accounting moves that transfer revenues to a foreign subsidiary located in a lower-tax country.
Analysts said that some countries, such as Ireland, will not likely agree to a higher tax rate.
A Treasury official agreed that some countries may not back a shift to a global minimum tax but said tax gimmicks would be minimized if the U.S. and other major economies agree to reforms.
International tax changes for multinationals is a key part of the Biden administration’s plans to pay for a $2.3 trillion infrastructure spending plan. The administration is also calling for an increase in the corporate tax rate to 28% from 21%.