The Biden administration outlined its new position on the OECD's BEPS 2.0 project at a steering group of the Inclusive Framework on BEPS on 8 April 2021, with details of the plan being sent to 137 OECD Inclusive Framework member countries.
In relation to pillar one, the proposal would be based on revenue and profitability, which the Biden administration described as the ‘simplest and most principled of administrable option’. This would remove the distinction between industries and is intended to target the companies that are most focused on intangibles and that benefit most from global markets, but it is not intended to material reduce the quantum of profit available for reallocation. The proposal would include a requirement for a ‘binding non-optional dispute prevention and resolution process’ and a ‘precise definition of relevant unilateral actions’.
In relation to pillar two, the US supports the establishment of ‘robust’ minimum tax, with Janet Yellen, the US treasury secretary, stating that the US is currently working on an agreement with the G20 countries on a global minimum corporate tax rate.
Meanwhile, the Biden administration has published its domestic Made in America tax plan, which sets out a number of proposed US corporate tax reforms, including:
increasing the corporate tax rate from 21% to 28%;
repealing the foreign-derived intangible income (FDII) regime introduced by the Trump administration in 2017, which provides for a reduced rate of corporation tax on foreign derived intangible profits;
reforming the global intangible low-tax income (GILTI) regime, including increasing the minimum tax rate from 10.5% to 21%;
replacing the base erosion and anti-abuse tax (BEAT) regime with the introduction of stopping harmful inversions and ending low-tax developments (SHIELD), which is intended to more effectively target profit shifting to low-taxed jurisdictions by multinational corporations; and
introducing a new anti-base erosion regime, which is intended to strengthen anti-inversion provisions and prevent US corporations from inverting.
The Biden administration outlined its new position on the OECD's BEPS 2.0 project at a steering group of the Inclusive Framework on BEPS on 8 April 2021, with details of the plan being sent to 137 OECD Inclusive Framework member countries.
In relation to pillar one, the proposal would be based on revenue and profitability, which the Biden administration described as the ‘simplest and most principled of administrable option’. This would remove the distinction between industries and is intended to target the companies that are most focused on intangibles and that benefit most from global markets, but it is not intended to material reduce the quantum of profit available for reallocation. The proposal would include a requirement for a ‘binding non-optional dispute prevention and resolution process’ and a ‘precise definition of relevant unilateral actions’.
In relation to pillar two, the US supports the establishment of ‘robust’ minimum tax, with Janet Yellen, the US treasury secretary, stating that the US is currently working on an agreement with the G20 countries on a global minimum corporate tax rate.
Meanwhile, the Biden administration has published its domestic Made in America tax plan, which sets out a number of proposed US corporate tax reforms, including:
increasing the corporate tax rate from 21% to 28%;
repealing the foreign-derived intangible income (FDII) regime introduced by the Trump administration in 2017, which provides for a reduced rate of corporation tax on foreign derived intangible profits;
reforming the global intangible low-tax income (GILTI) regime, including increasing the minimum tax rate from 10.5% to 21%;
replacing the base erosion and anti-abuse tax (BEAT) regime with the introduction of stopping harmful inversions and ending low-tax developments (SHIELD), which is intended to more effectively target profit shifting to low-taxed jurisdictions by multinational corporations; and
introducing a new anti-base erosion regime, which is intended to strengthen anti-inversion provisions and prevent US corporations from inverting.
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