The Biden administration offered new proposals on taxing multinational companies in a bid to secure an international agreement aimed at reducing tax avoidance, particularly by big pharmaceutical and technology companies.
The administration is looking to limit the number of companies that would fall under an agreement that would address the challenge of taxing income whose location is difficult to confirm. The U.S. is now suggesting a bright-line approach based on companies’ size and profits — rather than the characteristics of the businesses.
The proposal would focus the new tax rules on fewer than 100 companies, those that are very large and have high profit margins. The administration’s plan doesn’t set specific revenue or profit-margin thresholds, and those numbers will be part of the international negotiations in the months ahead, said a person familiar with the proposal.
If accepted, the U.S. approach would spare hundreds of other corporations that would have been hit by the prior proposal, one that would have affected large, consumer-facing businesses more broadly.
Washington hopes its proposal could help conclude international talks that emerged following disclosures that companies such as Facebook Inc.
and Amazon. com Inc.
paid little tax in some markets in which they operated.
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