The Biden administration has pitched a compromise to counterparts around the world that would apply new global tax rules to no more than 100 large multinational corporations.
The U.S. plan would consider a company’s profitability in determining whether more of its income could be taxed by the countries where it does business. The Biden administration’s openness to talks comes after Trump officials had effectively withdrawn from the negotiations because they said the plan developed by the Organization for Economic Cooperation and Development (OECD) unfairly targets U.S. companies.
The OECD has been trying to reach agreement among nearly 140 countries on a global tax overhaul to address how “consumer-facing” digital giants like Apple, Google, Facebook and Twitter are taxed in countries where they have users. The OECD’s work has taken on some urgency as some countries have grown impatient and proposed their own digital tax plans while hoping for an international consensus.
In discussions earlier this year, Treasury Secretary Yellen told G20 finance ministers the U.S. would drop a “safe harbor” provision the Trump administration had been fighting for, which would have effectively allowed U.S. tech companies to opt out of any new tax regime. The announcement was applauded by many European nations and renewed hope that an agreement might be forged by this summer.