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Tax changes for big firms may not be ready by 2022, Janet Yellen says

Tax changes for big firms may not be ready by 2022, Janet Yellen says

July 13, 2021: -On Sunday, U.S. Treasury Secretary Janet Yellen said that a new mechanism to allow even more countries to tax large, profitable multinational firms might not be ready for consideration by lawmakers until the spring of 2022. Yellen told a news conference after G20 finance leaders meeting in Venice in Italy that the OECD “Pillar 1” changes of taxing rights was on a “slightly slower track” compared to a global corporate minimum tax of at least 15% as a significant tax deal consisting 132 countries.

The G20 finance ministers and central bank governors endorsed the deal this weekend. Still, questions remain over the ability of Biden’s administration to persuade a deeply divided Congress to ratify the changes.

Yellen said she includes provisions to implement the “Pillar 2” global minimum tax into a budget “reconciliation” bill by this year that Congress could approve with a majority.

The “Pillar 1” portion of the deal would end unilateral taxes on digital services in exchange for a new mechanism that would permit big profitable companies to be taxed in part based on where they sell products and services instead of their headquarters intellectual property reside.

This will require a multilateral tax deal that will take time to negotiate, a Treasury official said.

“Pillar 1 will be on a slower track slightly. We’ll work with Congress,” Yellen said when asked if a two-thirds majority would be needed in the U.S. Senate, which is usually the requirement for international treaties.

“It may be ready in the spring of 2022, and we’ll try to determine at that point what’s necessary for its implementation,” Yellen said.

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