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130 Countries to Support U.S Proposal for Minimum Tax

Janet Yellen, the Treasury Secretary, announced that 130 countries have agreed to support America’s proposal to set a global Minimum Tax on corporations.

The objective of the U.S’s proposal regarding the global Minimum Tax on corporations is to overhaul the international tax rules as a part of a broader agreement.

If all the nations widely accept the GMT globally, corporations will not have to move their headquarters to low tax jurisdictions like the British Virgin Islands and Ireland.

For years now, America has participated in international tax competition, cut the corporate tax rate to watch other nations lower their corporate tax in response.

As a result, now there has been a competition set among nations that will lower the corporate tax further and faster. Janet Yellen responding to this, said nobody has yet won the race on the accord.

However, the agreements by 130 nations representing more than 90% of the global GDP show that the race has come one step closer to the end, Yellen said.

According to the reports, the accord has included ending digital services taxes, which has targeted large U.S companies.

The nations that have agreed to the accord will now set new tax plans linked to the places where the multinational companies have their actual customers, operations, and executives.

The business where the international companies are headquartered will be no be considered.

Yellen did not yet reveal the tax rates upon which the GMT would be set.

The Biden administration expects the GMT rate to be at least 15%.

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