German Finance Minister and Vice-Chancellor Olaf Scholz speaks to the media upon his arrival for an informal meeting of the Eurogroup on May 21, 2021.
CARLOS COSTA | AFP | Getty Images
LONDON — Germany on Friday warmly welcomed a United States proposal that calls for corporations around the world to pay at least a 15% tax on their earnings.
The U.S. Treasury Department released its plans on Thursday, saying that international negotiations should be ambitious — meaning that ultimately the figure could be higher than 15%. The corporate tax rate in the U.S. is currently 21%, but President Joe Biden has plans to raise it to 28% and wants higher rates in the rest of the world.
“This is really a big progress,” German Finance Minister Olaf Scholz said Friday morning regarding the U.S. announcement. “I am now, at this morning, very happy.”
“We are happy that it looks very much like we will have a solution in the summer this year. And the new administration in the United States makes a difference because they said it is feasible to do it,” Scholz told reporters in Lisbon, Portugal.
“This is the best chance for having a global tax reform which (will fight) against the race to the bottom,” he added.
The issue can be contentious within the European Union, where various member states charge different corporate tax rates and can attract big-name firms by doing so. Ireland’s tax rate, for example, is 12.5%, while France’s can be as high as 31%.
Speaking in April, Irish Finance Minister Paschal Donohoe said smaller nations should be allowed to have lower tax rates given that they don’t have the same capacity for scale as the larger economies do, the U.K.’s Guardian newspaper reported.