Janet Yellen pledges greater U.S. global co-operation

The Treasury is gearing up to back United States calls for a global minimum corporate tax rate as European leaders swing behind a radical plan put forward by the Biden administration. A global minimum tax would level the playing field, somewhat, in the taxation of MNCs.

Some tax experts say Canada can benefit from the USA government's decision to join a campaign for the creation of a global minimum corporate tax rate for the world's major economies.

Yellen, in her speech, criticized the strategy of President Donald Trump's administration, decrying four years when the U.S.

Despite Ms Yellen's intervention, the British Treasury said that it remains focused on reaching a deal to fairly tax the profits of tech titans rather than a wider shake-up of the global system. However, she will reportedly argue that the tax rate minimum is for the main goal of ensuring those foreign countries have enough revenue to maintain their own governments.

The tax changes include raising the country's corporate tax rate from 21% to 28%, a move that conservatives and moderate congressional Democrats have argued could be devastating for the American middle class.

G20 finance ministers are expected to discuss global tax issues, including taxes for digital services during a virtual meeting on Wednesday.

The Liberal government's fall economic statement last November reiterated Canada's support for a new deal on worldwide taxation, which has been the subject of discussion for years among members of the Organization for Economic Co-operation and Development. The Liberals have not announced any plans to alter the federal corporate tax rate.

The corporate tax hikes in the US and Britain are being presented as an effort to raise billions in revenue to help offset the cost of pandemic-related support programs and stimulus spending.

Also, last year, nine countries lowered their corporate tax rates.

The claim was described as "questionable" in a report previous year by tax lawyer Jeffrey Trossman for the Canadian Tax Foundation.

"The evidence does not support the assumption ... that higher headline [corporate income tax] rates will produce more corporate tax revenue for governments", the report stated.

She said that for companies and economies to remain competitive it was important to "end the pressures of tax competition and corporate tax base erosion". "It is a big concern of ours".

"We welcome the strong support from all G20 Finance Ministers for an agreement on both OECD pillars by July 2021", Ferrie said.

"We remain committed to ensuring that all businesses, including digital ones, pay their fair share of tax, where it is rightfully due", European Commission spokesman Dan Ferrie told a news briefing when asked about the USA proposal.