U.S. Companies Score Partial Reprieve From Global Minimum Tax Deal

livemint.com:

WASHINGTON—U.S.-based companies won relief from two pieces of the global minimum tax deal, and the changes will delay or reduce the taxes they are set to pay to foreign countries. Under the updated agreement negotiated by the Treasury Department, companies will have an extra year—through 2025—before foreign countries can start imposing new taxes on any U.S. companies deemed to pay too little tax in the U.S.

And the clean-energy tax credits at the core of last year’s Inflation Reduction Act will be counted in a more favorable way than some companies had feared, offering certainty as a tax-credit trading market gets under way. The Organization for Economic Cooperation and Development, which is leading the talks, detailed the changes Monday in technical guidance after negotiations among countries. The U.S.

and about 140 other jurisdictions agreed in late 2021 to impose a 15% minimum tax on large companies in each country where they operate. Negotiators, including Treasury Secretary Janet Yellen, hailed the deal as a landmark achievement in international cooperation and a bulwark against corporate tax dodging. But implementation has been slow and messy.

The 15% minimum tax must be calculated consistently across countries and companies, requiring clear definitions of income and taxes. That has led to a series of technical rules, including Monday’s 91-page update. Some countries—Japan, South Korea and members of the European Union—are forging ahead with minimum taxes under the deal, but the U.S.

isn’t. After negotiating the deal, the Biden administration couldn’t push the changes through the Democratic-controlled Congress last year. Republicans, who now lead the House, oppose the deal, calling it a global tax surrender.