Signs of Progress on Global Minimum Tax

Signs of Progress on Global Minimum Tax

© Michael Kooren / Reuters

The Biden administration has proposed a global minimum tax rate of 21% for multinational corporations but needs other counties to agree in order to make the system work. On Monday, Hans Vijlbrief, a deputy finance minister in the Netherlands, told Bloomberg that he was optimistic that an agreement can be made, potentially marking a significant turning point in the battle against corporate tax evasion.

“When the Americans initiate such a proposal and get backing from big countries like Germany and France, it would be surprising if a deal isn’t reached,” Vijlbrief said. “Tax competition is becoming something of the past.”

The deputy minister’s comments are particularly noteworthy because of the role of the Netherlands plays in the global tax avoidance system. According to the Tax Justice Network, the Netherlands is the fourth largest tax haven in the world, behind only the British Virgin Islands, the Cayman Islands and Bermuda, and figures prominently in tax schemes deployed by some of the largest multinationals.

Vijlbrief said a deal could be reached by July, though many of the details need to be worked out. However long it takes, though, the interest in fostering tax evasion seems to be waning. “If you ask me, this is not the business climate you want to pursue,” Vijlbrief said. “It damages the tax climate and political morals in a country. If you want people to pay their taxes, big companies must do so too.”