US makes new offer on setting global minimum corporate tax rate at 15%

The US has made a new offer that a global minimum corporate tax rate could be set at 15 per cent in an effort to get agreement at talks underway at the OECD.

The offer, confirmed in a statement from the US Treasury Department, could pave the way for an outline agreement by July on a major shake-up of the taxation of big multinationals, with major implications for Ireland.

A global minimum tax is one of the key areas where agreement is being sought at the OECD among more than 130 countries who are trying to hammer out a new way of taxing multinationals. Following a proposal from the Biden administration that it would impose a minimum global tax of 21 per cent on US companies, there had been speculation that it would push for a similar rate to be agreed by other countries at the OECD talks.

However officials working for US treasury secretary Janet Yellen said in a statement that the US had proposed a rate of " at least 15 per cent" in an attempt to broker an agreement. This is seen as an effort to get countries with lower corporate tax rate like Ireland on board for an agreement. The officials quoted said the offer had been greeted "enthusiastically" at the talks. Ireland is not a member of the steering committee at the OECD where the offer was made.

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Agreement on a global minimum tax rate at the OECD would not be binding on lower-tax countries like Ireland, but it would lead to pressure to increase our current 12.5 per cent rate. The outlook is complicated by the US plan to impose a 21 per cent global rate on the earning of its multinationals, many of which have their international headquarters in Ireland.

However this rate has yet to be agreed by Congress, as part of a package in which US president Joe Biden proposes that the main US domestic corporate tax rate rises to 28 per cent.

In terms of the OECD talks, the Treasury statement said that the 15 per cent was a minimum target and that the US would still push for a higher figure. However 15 per cent is the kind of figure which has been speculated as one where agreement might be reached at the OECD. Agreement on a global minimum rate would effectively mean Ireland and other lower tax countries would be severely limited in using tax advantages to attract foreign direct investment.

Minister for Finance Pascal Donohoe has expressed reservations about the minimum tax plan and argued that smaller countries should still be able to use tax to attract investment. Another part of the proposed EU deal would mean big companies paying a digital sales levy in markets where they sold product and this is likely to reduce corporate tax receipts in Ireland.