The US has put forward a new plan on global corporate taxes in an effort to resolve disagreements over upcoming tech tax reforms.
President Joe Biden’s administration has submitted proposals that would see tech giants and other large multinational corporations pay higher taxes in countries in which they operate, regardless of their physical presence in those areas.
In exchange a higher minimum corporation tax would be agreed on an international level, the Financial Times reported.
The plans, sent to the 135 countries negotiating new international tax laws through the OECD, are designed to offer a fairer distribution of tax revenue while promising a more stable international system that would halt the spread of unilateral national taxes and reduce tax avoidance.
OECD talks have been underway since 2019, but progress has been slowed by US concerns that new rules would unfairly target American tech giants.
A number of European countries, including the UK, have since introduced their own digital levies aimed at Big Tech.
If agreed, these plans would allow the US to raise taxes on corporations without fear of being undercut by other countries, as a global minimum tax rate would be in place.
Meanwhile other nations would receive greater tax revenue from multinationals that operate in their country but pay little corporation tax.
It would also help to ease trade tensions linked to the tax discussions, with the US threatening tariffs against countries that introduced their own laws.
Britain — which has introduced a two per cent digital services tax — and other countries have pledged to drop their individual tech tax laws if a global agreement is reached.
According to the report, the new regime would cover around 100 of the world’s biggest companies, including major US tech giants such as Amazon, Apple, Facebook and Google.
Pascal Saint-Amans, head of tax administration at the OECD, welcomed the US proposals.
“This reboots the negotiations and is very positive,” he told the FT.
“It is a serious proposal with a chance to succeed in both the [international negotiations] and US Congress. Peace is more important than anything else and this would stabilise the [international corporate tax] system in the post-coronavirus environment.”
The OECD is leading tax negotiations and aiming to reach the outline of a global deal by the summer.