A new global minimum tax means companies operating internationally should expect an increase in US tax rates along with a wider net for capturing profits in low-tax countries.

Treasury Secretary Janet Yellen called for a global minimum tax for multinationals in a speech to the Chicago Council of Global Advisors on April 5, 2021. Under the proposal, US multinational companies would pay at least a 21 percent tax rate on profits earned in every country with foreign operations. This proposal doubles the 10.5% GILTI rate from the 2017 corporate tax rate cut, but with even more restrictions.

Secretary Yellen stated “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.”

KBKG’s transfer pricing practice leader, Alex Martin, noted that “the Biden administration intends to use this global minimum tax approach to pay for infrastructure spending. This strategy is also part of a coordinated international effort to reduce incentives for profit-shifting to low-tax jurisdictions. The US is not acting alone in applying new approaches to raise revenue from multinational companies.”

About the Author

Alex Martin – Principal
Alex Martin is Principal and Transfer Pricing Practice leader at KBKG, operating from Michigan. He has 24 years of full-time transfer pricing experience working in Washington, D.C.; Melbourne, Australia; and Detroit, Michigan over the course of his career. Alex has assisted companies in many industries addressing transfer pricing issues on a US and global basis. » Full Bio