Yellen says tax changes for large companies may not be ready until 2022

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U.S. Treasury Secretary Janet Yellen answers questions during the Senate Appropriations Subcommittee hearing to consider the FY22 budget request for the Treasury Department at Capitol Hill in Washington, DC on June 23, 2021.

Greg Nash | Swimming pool | Reuters

U.S. Treasury Secretary Janet Yellen said on Sunday that a new mechanism that allows more countries to tax large, highly profitable multinational companies may not be ready for lawmakers to consider until spring 2022.

Yellen told a press conference after a meeting of G20 financial leaders in Venice, Italy that the reallocation of taxing rights in the OECD “pillar 1” was on a “slightly slower track” than ” a global minimum corporate tax of at least 15% as part of a major tax agreement between 132 countries.

G20 finance ministers and central bank governors approved the deal over the weekend, but questions remain about the ability of US President Joe Biden’s administration to persuade a deeply divided Congress to ratify the changes.

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

The “Pillar 1” part of the agreement would end unilateral taxes on digital services in exchange for a new mechanism that would allow large profitable companies to be taxed in part based on where they sell products and services, rather than where their headquarters and intellectual property are located. to reside.

This will require a multilateral tax deal that will take time to negotiate, a treasury official said.

“Pillar 1 will be on a slightly slower track. We will work with Congress,” Yellen said, when asked if a two-thirds majority would be needed in the US Senate, which is normally the treaty requirement. international.

“It could be ready in the spring of 2022 and we will try to determine at that time what is needed for its implementation,” Yellen said.


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