US Treasury secretary Janet Yellen has warned that recently-agreed reforms to corporate tax rules that will ensure major companies pay tax in more countries may not be ready until next year.
Speaking after a G20 finance leaders meeting in Venice today, Yellen said the OECD’s re-allocation of taxing rights was on a “slightly slower track” than a global minimum corporate tax rate of 15 per cent.
She said the measures may not be ready for consideration by US politicians until spring next year.
G20 finance leaders and central bank governors have approved the deal, but questions remain over US President Joe Biden’s ability to push the changes through Congress.
Yellen’s comments suggest the reforms could be implemented in two stages, with the global minimum tax rate moving first.
She said she hoped to include provisions to implement the so-called pillar 2 minimum tax into a budget “reconciliation” bill this year that Congress could approve with a simple majority, potentially without Republican support.
The second portion of the deal — dubbed pillar 1 — would allow major multinational corporations such as Google and Facebook to be taxed in countries where they sell products and services, rather than just where they are headquartered.
A Treasury official warned this would require a multilateral tax agreement that would take time to negotiate.
“Pillar 1 will be on a slightly slower track. We’ll work with Congress,” Yellen said. “It may be ready in the spring of 2022 and we’ll try to determine at that point what’s necessary for its implementation.”