Treasury Secretary Yellen tries to get the global tax deal back on track
Poland’s stance was sharply criticized by European officials, most notably France, whose finance minister Bruno Le Maire suggested that Warsaw was instead withholding a final deal in retaliation for a Europe-wide political dispute. Poland has threatened with veto measures requiring a unanimous vote of the EU due to a decision from Brussels to block funds for the resumption of the pandemic for Poland.
The European Union had refused to provide billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system. Last week, on the eve of Ms Yellen’s visit to Poland. Poland, the European Commission intervened with an 11th hour agreement that unlocks 36 billion euros in pandemic recovery funds for Poland, which has pledged to reach some milestones such as judicial and economic reforms, in exchange for the money.
Negotiators around the world have been working for months to sort out the technical details of the deal, such as what types of income would be subject to the new taxes and how the deal would be enforced. Failure to finalize the agreement would likely mean further proliferation of the taxes on digital services that European countries have imposed on American tech giants, much to the dismay of those companies and the Biden administration, which has threatened to impose tariffs on the nations that adopt their own levies.
“It’s fluid, it’s in motion, it’s a moving goal,” said Pascal Saint-Amans, director of the center for tax policy and administration at the Organization for Economic Co-operation and Development, of the negotiations at the Washington Bar Association’s annual tax conference this month. “There is an extremely ambitious timeline.”
Countries like Ireland, with a historically low corporate tax ratethey were wary of raising their rates if others did not follow suit, so it was important to ensure there was a common understanding of the new tax rules to avoid opening the door to new loopholes.
“The idea of having multiple countries enforcing the same rules is a new concept in tax matters,” said Barbara Angus, Ernst & Young’s global tax policy leader and former chief tax advisor to the House Ways and Means Committee. She added that it is important to have a multilateral forum so that countries can agree on how to interpret and apply levies.
However, while Ms. Yellen is pushing foreign nations to adopt the tax deal, it’s unclear whether the United States will be able to pass its own legislation to comply.