Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Canada’s finance minister has defended a G7 tax deal that granted special treatment to the US, following a backlash from China and some EU countries against the compromise.
François-Philippe Champagne said the arrangement, brokered during his country’s presidency of the G7, had accommodated US requirements but remained “true to the intent” of the OECD’s regime ensuring a minimum corporate tax rate.
“Having the United States on board in addressing that global issue is something that I would say colleagues around the table wanted to achieve — and we found a way to achieve it,” Champagne said in an interview with the Financial Times.
“We found an acceptable way forward for all parties involved, with unity of intent, but developing a model that would allow the United States to remain committed to the goal that we have stated with respect to the global minimum tax.”
Negotiators at the OECD are racing to agree to a package by the end of the year that will formalise the G7 agreement to spare the US’s largest companies from paying more corporate tax overseas.
US Treasury secretary Scott Bessent in a post on X on Monday urged dissenting countries to “join the consensus on the path forward for this critical issue”.
The FT reported last week that China, the Czech Republic, Estonia and Poland had objected to the package on offer. China had sought to have access to the same carve-out as the US, while other countries, including Poland and the Czech Republic, had expressed unhappiness about tax incentives that qualify as being compliant with the global minimum tax. Poland has since dropped its objections to the OECD agreement, according to officials.
Talks have continued this week to try to persuade the remaining countries that have concerns to drop their objections to the US carve-out negotiated between Washington and the G7 leading economies in the summer, with some people close to the discussions saying an announcement is imminent. An OECD text that included a carve-out for US companies was due to be published last week but was stopped after the objections.
Champagne said he had not been involved in any discussions examining alternative models for other countries on top of the US.
“We had an alternative track for the United States keeping [to] the intent we have. I have not seen discussions or suggestions so far to extend that beyond what has been agreed with the United States of America,” he added.
The minister’s words come as Canada prepares to hand the G7 presidency over to France.
Agreed by 135 countries in 2021, the landmark cross-border OECD tax regime has faced considerable implementation challenges.
Republicans earlier this year planned to introduce a “revenge tax” that would punish companies and investors from countries that implemented the global minimum tax as it was originally designed, but this was dropped after the G7 agreement.
Republican senators have signalled they would resurrect the revenge tax if countries do not reach agreement on the US exemption by the end of the year.
Additional reporting by Paola Tamma in Brussels
Source link
