The US is spearheading a new plan for global corporate taxation to settle disagreements over upcoming technology tax reforms.
The Biden administration has put forward proposals that would force technology giants and other multinationals to pay higher taxes in the countries in which they operate, regardless of their physical presence, in exchange for a higher minimum corporate tax at the international level.
The plans, sent through the OECD to 135 countries negotiating new international tax laws, will provide a fairer distribution of tax revenues while ensuring a more stable international system that would stop the spread of unilateral domestic taxes and curb tax avoidance.
Talks have been ongoing since 2019, but progress has been thwarted by US concerns that the new rules would primarily hit American tech giants.
Once these plans are final, the US could raise taxes on corporations without fear of being undercut by other nations, as a global minimum tax rate would then be introduced.
Moreover, other countries would receive higher tax revenues from multinationals that operate in their country but pay little corporation tax.
The new tax system would cover about 100 of the world’s largest companies, including Amazon, Apple, Facebook and Google.
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