July 30, 2021

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U.S.’s Yellen says tax changes for large firms may not be ready until 2022

VENICE (Reuters) – US Treasury Secretary Janet Yellen said Sunday that a new mechanism allowing more countries to tax large, highly profitable multinational corporations may not be considered by lawmakers until spring 2022.

Yellen said at a press conference after a meeting of the G20 chiefs of finance in Venice, Italy, that the reallocation of taxation rights by the OECD “Pillar 1” was on a “slightly slower path” than a global minimum corporate tax of at least 15% as part of the big one Tax treaty between 132 countries.

The G20 finance ministers and central bank governors approved the deal over the weekend, but questions remain as to whether President Joe Biden’s administration can convince a deeply divided Congress to ratify the changes.

Yellen said she hopes to include provisions to implement the so-called “Pillar 2” minimum tax in a “reconciliation” budget bill this year that Congress could pass by a simple majority.

The “Pillar 1” part of the deal would end unilateral taxes on digital services in exchange for a new mechanism that would allow large profitable companies to tax in part based on where they sell products and services rather than theirs Headquarters and their intellectual property.

This requires a multilateral tax treaty, which will take time to negotiate, an official from the Treasury said.

“Pillar 1 will be a little slower. We will work with Congress,” said Yellen when asked whether a two-thirds majority is required in the US Senate, which is normally required for international treaties.

“It could be ready in spring 2022 and we will then try to find out what is necessary to make it happen,” said Yellen.

(Reporting by David Lawder and Gavin Jones; Editing by Hugh Lawson)