Manuel Balce Ceneta/AP
- US Treasury Secretary Janet Yellen on Monday called for a minimum global rate of corporate tax.
- Germany's finance minister Olaf Scholz said Tuesday he supported the plan.
- Scholz said a taxation deal could be agreed among more than 140 countries by this summer.
- See more stories on Insider's business page.
Germany has backed US Treasury Secretary Janet Yellen's proposal for a global minimum rate of corporate income tax, and said a deal could be done by summer.
German finance minister Olaf Scholz told Reuters on Tuesday that he was in "high spirits" about the potential deal, which could "put an end to the worldwide race to the bottom in taxation."
He said the new deal, which he predicted could be agreed by 140 countries by summer, must include rules on big digital tech companies doing business abroad.
Yellen on Monday argued for a global minimum corporate-tax rate. This would prevent multinational companies from taking advantage of lower taxes overseas, she said.
In a speech to the Chicago Council on Global Affairs, Yellen said the Biden administration was working with G20 countries to agree to a global minimum corporate tax rate to stop "the race to the bottom," whereby countries lower their taxes to attract more business.
"Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids. It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods," Yellen said.
She had discussed global tax issues with more than 140 countries via the Organization for Economic Cooperation and Development (OECD), Insider reported Sunday.
The international tax would apply to all multinational corporations, regardless of where their headquarters are, Yellen said.
"Over the last four years, we have seen first-hand what happens when America steps back from the global stage," Yellen said. "'America first' must never mean 'America alone.'
"Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity," Yellen added.
The Biden administration wants to help set the global minimum tax rate at 21%, as well as increase the US corporate tax rate from 21% to 28% via the Made In America Tax Plan. This could help fund his $4 trillion infrastructure plan to rebuild roads, bridges, and electric grids in America.