Towards ensuring all countries get a fair portion of multinationals' taxes

THE creation of a global minimum tax regime seems to have become a quest du jour for some members of the Organization For Economic Cooperation and Development (OECD).

Recently the Biden administration announced that it would seek a global minimum tax rate of 21 per cent on corporations. The idea promptly ran into resistance among other OECD members such as Ireland which has a corporate tax rate of only 12.5 per cent.

So, when US Treasury officials met negotiators from 24 OECD nations last week as part of the group's international tax negotiations, they lowered the target figure to 15 per cent. The rationale is that something had be done to stop a race to the bottom whereby countries vie against each other to offer tax incentives to attract business to their own shores. A global minimum tax rate would level the playing field. Equally true would be the fact that US President Joe Biden's multi-trillion dollar infrastructure proposals would need to be funded if they are to get a chance of being passed by the US Congress. This minimum tax proposal would be one way to get to that goal.