A standardized global corporate tax would be ‘a plus’, says IMF chief

The IMF on Tuesday welcomed Washington’s proposal for a minimum global corporate tax rate of 15%, saying it would free up more resources for governments to invest in areas such as education, health or services. infrastructure.

Although there have been proposals to set the rate as high as 21%, “anything above what it is today in many places is 10% [per cent] or even less is an advantage,” said Kristalina Georgieva, Managing Director of the International Monetary Fund.

The Washington-based lender has long advocated an agreement on a common global tax, she said in a conversation with The Washington Post.

“Why? Because when we have it, there’s no race to the bottom and less tax evasion,” Ms Georgieva said.

It means “more money in the public purse to invest in education and healthcare, and infrastructure, digitalization – all the good things that we recognize we need to invest more in”.

However, she acknowledged the challenge of finding “the middle ground” for the global economy between this idea and the best rate for national governments, given that some countries have relied on low tax rates to compete.

Member countries of the Organization for Economic Co-operation and Development (OECD) agreed in principle in 2015 to work on a plan to prevent companies from evading tax by moving their headquarters to low-rate countries taxation, a process known as base erosion and profit shifting.

Years of negotiations have made little progress, but talks have been reignited with the arrival of President Joe Biden in the White House.

Last week, his administration proposed to OECD partners a multinational tax rate of at least 15%, the first time the United States has formally proposed a global minimum rate.

US Treasury Secretary Janet Yellen will attend the G7 finance ministers meeting in London next week, which is expected to approve the 15% proposal.

His deputy, Wally Adeyemo, told Reuters on Monday he expected to see “a lot of unified support” for the plan from the G7 countries.

The largest eurozone economies, Germany and France, have expressed support for the US plan.

The other question dominating the debate is how to deal with the taxation of big tech companies like Amazon, Apple, Google and Facebook.

The challenge is how to ensure a “fair distribution” of taxes where profits are made and where companies are located, Ms Georgieva said.