Global heads of government, including US President Joe Biden, will endorse a historic revamping of international corporate tax rules when they gather in Rome this weekend, though they have a long way to go to make the plan a reality.
Multi-country negotiations over important aspects of the plan remain unfinished. And the details that won’t emerge for many months may determine whether the US Congress approves or rejects the deal, a decision that could make or break it internationally.
As they prepared to head for Rome, Treasury officials reiterated their optimism that the deal would ultimately attract bipartisan support among US lawmakers.
The agreement would end the flight of multinationals to low-tax havens, help provide needed tax revenue for governments and deliver a new level of certainty for companies operating across tax jurisdictions, the officials said in a briefing call with reporters on Tuesday.
The pact, backed by 136 countries worldwide, would set a global minimum tax of 15% and reallocate some of the taxes imposed on the largest multinational firms based on where they generate revenue, instead of where they book profits.
But US officials also acknowledged that work has only just begun on designing the formula for reallocating tax rights.
That formula will help determine the impact of the global tax deal on US tax revenues. And should the reallocation have a net negative impact, it will be tougher for the Biden administration to secure congressional approval.