On April 6, 2021, U.S. Secretary of the Treasury Janet Yellen announced a new approach to combating offshore companies and tax evasion by entrepreneurs. It is proposed to reduce the corporate income tax for companies that operate production units in multiple countries. The United States has sent this proposal to 135 countries.
If accepted, this proposal would allow other countries to increase their revenues from large corporations that are already operating in multiple jurisdictions but paying minimal taxes there.
The new U.S. tax model aims to accelerate negotiations on creating a more reliable international taxation system. It could halt the spread of domestic tax schemes and prevent multinational corporations from avoiding taxes and shifting profits to other jurisdictions.
The United States intends to raise the national corporate tax rate from 21% to 28% and is proposing a global minimum tax rate of 21%. Washington is collecting taxes to fund President Biden’s new ambitious $2.25 trillion economic plan. According to officials, the plan would pay for itself over 15 years through the proposed tax increases.
Recently, the International Monetary Fund proposed a temporary “solidarity tax” on corporations that made large profits during the coronavirus crisis. The idea is to introduce a tax on excess profits as a gesture of solidarity with those affected by the crisis and to replenish national budgets. According to the IMF, such a tax could replace or supplement the existing corporate income tax.
Sowana reminds that Secretary Yellen’s statement came just a few days after President Joe Biden announced an ambitious plan to revive the domestic economy. U.S. authorities are actively seeking new ways to increase budget revenues in this regard.
