ROME – President Joe biden and the leaders of some of the richest countries in the world on Saturday supported a global minimum corporate tax of 15%, a radical restructuring of the international tax system that aims to ensure that big companies pay their fair share.
Finance ministers from nearly 140 countries had already backed the tax change. Biden and other leaders of the Group of 20, or G-20, spoke in favor of the tax at the opening session of their first in-person summit in two years.
“We have reached a historic agreement for a fairer and more equitable tax system,” Italian Prime Minister Mario Draghi announced in his opening speech.
Formal approval of the tax restructuring is expected to be released in a joint statement on Sunday.
G-20 support for the international tax package has been a sort of victory for Biden, who pushes Congress to pass a minimum 15% corporate profit tax to help pay for one of his major national plans – a ambitious program to combat climate change. and social security proposals.
“This deal will make the world economy a more prosperous place for American businesses and workers,” Treasury Secretary Janet Yellen, one of the biggest supporters of the tax plan, tweeted on Saturday. “Rather than competing on our ability to offer lower fares, America will now be competing on the skills of our people, our ideas and our ability to innovate – which is a race we can win.”
Lilian Faulhaber, a Georgetown University law professor who specializes in international tax issues, called it a “huge political step” to get other countries to endorse the concept, but said none of those countries did. ‘had still adopted a minimum tax rate.
“This is a major step in the discussions about tax competition and what we see as a low tax rate, but we actually don’t know what the effect will be for a little bit longer and we know how much. countries – if any – are implementing this sort of minimum tax, “she said, noting that the deal is not expected to enter into force until at least 2023.
The Trump administration included a global minimum tax in the GOP’s 2017 tax reform bill designed to ensure that U.S. multinational corporations pay at least a 10.5 percent rate on income earned in other countries.
Faulhaber pointed out that the US version had not led other countries to adopt a similar tax rate.
The approval also means that G-20 leaders are backing a plan to subject U.S.-based tech companies to higher or different taxes, Faulhaber noted. Tech giants like Facebook and Google have been criticized for paying low taxes in European countries where they earn huge sums but have no physical presence.
Global health concerns were also on the agenda of G-20 leaders, who gathered in a modernist cloud-shaped convention center in Rome.
The G-20 is exploring ways to prevent another pandemic like COVID-19, which has killed nearly 5 million people worldwide, including more than 743,000 Americans.
In his opening remarks, Draghi called on rich countries to speed up the distribution of vaccines to poor countries. Only 3% of people living in the poorest countries have been vaccinated, while 70% of people living in rich countries have received at least one injection.
The disparity is “morally unacceptable”, he said.
Also on Saturday, Biden met on the sidelines three European allies – the German Chancellor Angela Merkel, French President Emmanuel Macron and British Prime Minister Boris Johnson – chart the way forward for the negotiations on Iran’s nuclear program. The four leaders posed for a group photo before going behind closed doors for their consultations.
Biden’s advisers tried to revive a 2015 deal that limited Iran’s ability to enrich uranium to military-grade levels. Then-President Donald Trump withdrew from the deal in 2018.
Asked by reporters when he wanted talks to resume, Biden said, “They should resume.” He did not provide any details.
The four leaders later issued a joint statement expressing their determination to ensure that Iran can never develop or acquire a nuclear weapon and their growing concern that, as Iran halted negotiations in June, it accelerated the pace of “provocative nuclear measures”. such as the production of highly enriched uranium and enriched uranium metal.
“Iran has no credible civilian need for either measure, but both are important for nuclear weapons programs,” the statement said.
Allies called on Iranian President Ebrahim Raisi “to seize this opportunity and resume a good faith effort to conclude our negotiations as a matter of urgency.”
The meeting came days after Ali Bagheri, Iranian deputy foreign minister and chief negotiator for the talks, tweeted that Iran had agreed to resume negotiations by the end of November and that a date for a resumption of talks “would be announced within the next week.”
White House National Security Advisor Jake Sullivan said on Thursday that the United States was still trying to determine whether Iran was serious about the negotiations.
Ahead of the summit, Biden held separate meetings in Rome on Friday with Pope Francis and Macron.
On Monday, Biden will travel to Glasgow, Scotland for a United Nations climate change conference known as COP26. Biden has made climate change a key priority of his administration and is expected to speak at the conference’s opening session.
Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
Contribution: The Associated Press