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World leaders are making progress on a huge global tax overhaul

April 7, 2021. Summarized by summa-bot.

Compression ratio: 19.3%. 1 min read.

FILE - In this Aug. 14, 2019, file photo former Fed Chair Janet Yellen speaks with FOX Business Network guest anchor Jon Hilsenrath in the Fox Washington bureau in Washington. Yellen said Wednesday, March 24, 2021, that the U.S. government has more room to borrow, but also said higher taxes would likely be required in the long run to finance future spending increases. (AP Photo/Andrew Harnik, File)

For years, world leaders have been trying to launch a historic overhaul of global tax rules, aiming to tackle an unwieldy system rife with loopholes long exploited by big business. That goal may finally be in sight.

The Biden administration's decision to back a global minimum corporate tax rate while it pushes a massive $2 trillion infrastructure package in the United States has ignited hopes that a long-elusive agreement can be reached this summer.

Establishing a minimum corporate tax to discourage companies from filing taxes in countries with the lowest rates has been a key pillar of OECD discussions.

President Joe Biden has proposed increasing the corporate tax rate in the United States to 28% from 21%, as well as setting a minimum tax of 21% on US companies' foreign earnings.

Ireland, which has successfully recruited global companies including big US tech firms by offering a corporate tax rate of just 12. 5%, was more muted in its response, while expressing its commitment to ongoing discussions.

A minimum corporate tax rate around 21% would be well above the 12. 5% figure that has been under discussion at the OECD level, said Elke Asen, a policy analyst at the Tax Foundation's Center for Global Tax Policy.

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