The IRS is preparing for the implementation of a global tax deal this fall, according to a Treasury official who spoke at a Tax Executives Institute event this week.
The Organization for Economic Cooperation and Development (OECD) is close to reaching 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 wants to finalize the agreement by October and implement it by 2023. The plan gained considerable steam after Biden administration officials negotiated a compromise that would apply new global tax rules to no more than 100 large multinational corporations. The plan would set a minimum tax rate of at least 15% to prevent companies from relocating to low-tax havens and establish a system for sharing some of the profit imposed from taxing large multinationals based on where they operate and not where they’re headquartered.
If an agreement is reached this year, the U.S. could need bipartisan support in the Senate to approve U.S. cooperation. So far, 132 countries are on board with the OECD plan. A key holdout is Ireland, which wants the proposed 15% minimum tax rate on corporate profits to be a ceiling, not a floor. Ireland also doesn’t want to accept a deal until it’s clear what the U.S. Congress will authorize.