US calls on G7 to quickly implement global tax reform

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In this file photo US Treasury Secretary Janet Yellen speaks to reporters at the White House in Washington in May 2021 (AFP/SAUL LOEB)
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US Treasury Secretary Janet Yellen on Thursday urged countries in the G7 group of richest nations to quickly implement a global tax reform aimed at curbing tax avoidance.

The proposal announced in June would impose a 15 percent minimum corporate tax globally, and is aimed at stopping companies from shifting their profits to jurisdictions with lower tax rates.

G20 finance ministers backed the deal in July, followed by 134 Organization for Economic Co-operation and Development member countries representing more than 90 percent of the world's GDP, according to the Treasury.

"Secretary Yellen today expressed support for ongoing efforts to improve the international tax system and the importance of swift implementation of the new system," Treasury said in a statement following a meeting of G7 finance ministers held virtually.

However the reform has been opposed by Ireland, which is not part of the G7 and a favorite headquarters location for companies, particularly US tech and pharmaceutical giants, who prefer their lower 12.5 percent tax rate.

The United States is also working on a reform targeting companies that benefit from tax havens, with the objective of making these companies pay a minimum of 21 percent tax regardless of the rate in the country where their profits are declared.

"Together with the global deal, this policy will generate funding for a sustained increase in critical investments in education, research, and clean energy -- which will improve the lives of US citizens and help the US remain the best place in the world to do business," Yellen said.

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