The head of the Organisation for Economic Cooperation and Development (OECD) on Tuesday said he was “quietly optimistic” a landmark deal to establish a global minimum tax will be approved by European Union members but implementation may not occur until 2024.
OECD Secretary General Mathias Cormann also told a panel at the World Economic Forum in Davos, Switzerland, that it was “manifestly” in the interest of the United States to join the deal struck last year among nearly 140 countries to establish a global minimum tax rate of 15% on multinational corporations.
“I’m quietly optimistic the European Commission will be presenting the directive to implement” the deal, Cormann said.
Cormann’s remarks came as French Finance Minister Bruno Le Maire said on Tuesday he was confident EU finance ministers would unanimously back the global minimum tax next month.
Approval by the EU has been held up by objections from Poland, which vetoed a compromise in April to launch the 137-country deal.
U.S. approval, meanwhile, has been stalled in Congress, and Cormann was asked if prospects for U.S. ratification would be scuppered should Republicans who broadly oppose the deal win majorities in the House of Representatives and Senate in November’s mid-term elections.
The deal could be implemented by other countries even if U.S. legislators decline to sign on, and Cormann argued that would put U.S. multinational businesses at a disadvantage.
“I can’t imagine that any country … would make a judgment that would put themselves at that sort of disadvantage,” Cormann said. “I believe that irrespective of who’s in the majority in Congress … this is manifestly in the U.S. interest.”
Congress needs to approve changes to the current 10.5% U.S. global overseas minimum tax known as “GILTI”, raising the rate to 15% and converting it to a country-by-country system.
The changes were initially included in U.S. President Joe Biden’s sweeping social and climate bill, which stalled last year after objections from centrist Senate Democrats.
But prospects for a slimmed-down spending package with the tax changes look increasingly difficult as midterm congressional elections approach and as lawmakers voice concerns about more spending amid high inflation.