The proposal for a global minimum corporate tax rate on multinational corporations gained strong, sudden traction this week after US Treasury Secretary Janet L. Yellen reiterated the US’s full support for the measure on Monday.1 Following the developments, G20 financial leaders discussed the idea of a global minimum corporate tax rate today and reaffirmed their commitment to reach an international deal by mid-2021.2
Commenting on the G20 meeting and US support for a global minimum corporate tax rate, Alex Cobham, chief executive at the Tax Justice Network, said:
“If you blinked, you might have missed the idea of a global minimum tax rate for multinational corporations leap from the margins of tax justice advocacy to the top of the richest countries’ agendas. The US Treasury Secretary Janet Yellen has not only signalled that the US is throwing its full weight behind a global minimum corporate tax rate but has explicitly framed this as an end to the race to the bottom. This is both a powerful policy shift and a powerful narrative shift.
“One of the biggest economic myths we’ve come up against in our advocacy work at the Tax Justice Network is the idea that countries aggressively undermining each other’s ability to raise tax is a way for countries to secure their own tax sovereignty. Decades of research show this couldn’t be further from the truth. The race to the bottom has undermined all countries’ tax sovereignty to the point where the world is now losing the equivalent of one nurse’s annual salary to a tax haven every second3 while a global pandemic rages on. Secretary Yellen has finally nailed the lie by calling for an end to the race to the bottom precisely so that countries and their peoples can protect and enjoy tax sovereignty.
“With the debate on whether we need a global minimum corporate tax rate now settled, the next step is to make sure that a global minimum corporate tax rate is set in a way that protects all countries from tax abuse by multinational corporations, not just the richest. The High-Level UN Panel on International Financial Accountability, Transparency and Integrity called in February4 for a UN tax convention, which would provide the necessary basis. I would call on the UN Secretary-General to set those negotiations in motion today.”
The Tax Justice Network published a briefing on the global minimum corporate tax rate and recent development surrounding the measure on its website today.
Read our briefing on the global minimum corporate tax rate and recent developments here. The briefing provides a summary of obstacles to the measure and the way forward. The briefing also details the Tax Justice Network’s proposal on how a global minimum corporate tax rate can be implemented in a more effective way than that currently being formulated at the OECD.
Contact the press team: media [@] taxjustice [.] net
Notes to editor:
- Remarks by Secretary of the Treasury Janet L. Yellen on International Priorities to The Chicago Council on Global Affairs – 5 April 2021
- G20 Finance Ministers and Central Bank Governors (FMCBG) met on Wednesday, 7 April, for their second official meeting under the Italian G20 Presidency. Read the meeting summary here.
- The Tax Justice Network’s State of Tax Justice 2020 reported in November 2020 that countries around the world are losing over $427 billion in tax each year to international corporate tax abuse and private tax evasion, costing countries altogether the equivalent of nearly 34 million nurses’ annual salaries every year – or one nurse’s annual salary every second. Of the $427 billion lost in tax, $245 billion is directly lost to cross-border corporate tax abuse by multinational corporations and $182 billion to private offshore tax evasion by individuals.
- A group of heads of states launched a blueprint for global tax reform prepared by the UN FACTI panel calling for a UN tax convention to set global standards, and a new intergovernmental body at the UN to set tax rules. Read our summary of the report here.
About the Tax Justice Network
The Tax Justice Network believes our tax and financial systems are our most powerful tools for creating a just society that gives equal weight to the needs of everyone. But under pressure from corporate giants and the super-rich, our governments have programmed these systems to prioritise the wealthiest over everybody else, wiring financial secrecy and tax havens into the core of our global economy. This fuels inequality, fosters corruption and undermines democracy. We work to repair these injustices by inspiring and equipping people and governments to reprogramme their tax and financial systems.