Finance Ministers Meet in Venice to Finalize Global Tax Agreement

VENICE, Italy — The world’s top economic leaders are convening on Friday to hash out crucial details of what would be the largest overhaul of the international tax system in a century, kicking off a three-month race to finish a deal by the end of the year.

Gathering in this ancient hub of international commerce, finance ministers from the Group of 20 nations are pressing ahead with plans to put an end to global tax havens and force multinational corporations to pay an appropriate share of tax wherever they operate. The negotiations, which will have sweeping ramifications for the finances of global businesses, have been sputtering along for much of the last decade and are entering what officials hope to be the final stretch.

“A few big weeks and months are ahead,” Pascal Saint-Amans, director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, which is overseeing the talks, said in a brief interview ahead of the summit.

The meetings follow a breakthrough in the negotiations that came last week when 130 countries backed a conceptual framework for the new tax plan. The blueprint includes a global minimum tax of at least 15 percent that each country would adopt and new rules that would force technology giants like Amazon and Facebook and other big global businesses to pay taxes in countries where their goods or services are sold, even if they have no physical presence there.

Ahead of the meetings, Treasury Department officials said that the countries still need to settle on a global minimum tax rate, which the United States and France would like to be higher than 15 percent. Other countries with low tax rates, like Ireland, have so far refused to sign on to the agreement, and the G20 nations must determine how to coax those holdouts into agreeing to the tax.

Mr. Saint-Amans said he believed that reluctant countries such as Ireland would come around to join the agreement if the United States was able to pass the reforms through Congress — something he acknowledged was not guaranteed. Republican lawmakers have expressed some skepticism about the global minimum tax, in part because they see it as a stalking horse for the Biden administration to raise the U.S. corporate tax rate.

President Biden has tied his proposal to raise the corporate tax rate in the United States to 28 percent from 21 percent to a global minimum tax, saying that it would dissuade companies from simply moving operations offshore. Republicans, who cut the corporate rate from 35 percent to 21 percent rate in 2017, have said they will oppose any changes to those tax cuts.

Treasury officials have expressed confidence that the global tax can pass muster in the United States. But officials have not made clear whether the White House believes it needs to gain the support of reluctant Republicans or if they can push the tax changes through Congress only with votes from Democrats. Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, told reporters this week that he believed the Biden administration’s proposed tax overhaul would be dead on arrival in Congress.

“I think first, this is an economic surrender that other countries are glad to go along with, as long as America is making itself that uncompetitive,” Mr. Brady said. “And secondly, I think there are too many competing interests here for them to finalize a deal that would be agreeable to Congress.”

Other nations must also determine how to turn their commitments into domestic law.

The mechanics of changing how the largest and most profitable companies are taxed and exceptions for financial services, oil and gas businesses will also be central to the discussions. There are already concerns that carve-outs could lead to new tax loopholes.

Tax is not the only matter on the agenda this weekend. Ms. Yellen will be working with her international counterparts on a plan to provide more aid to developing countries to combat the coronavirus pandemic and how to deploy vaccines more widely.

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