G7 tax deal encounters friction in divided Washington

G7 tax deal encounters friction in divided Washington

Joe Biden's plan to overhaul the international tax system will face a difficult passage through the US Congress as Republicans threaten to vote down a prospective deal in a Senate where a two-thirds majority is necessary for approval.

Washington's efforts to break a diplomatic impasse on how global companies are taxed was rewarded over the weekend when the G7 backed a global minimum rate of at least 15 per cent and agreed that countries should have the right to tax a portion of the world's largest businesses' profits where they are generated.

But approving changes to international tax treaties would require support from a two-thirds supermajority on the Senate, posing a problem for the Biden administration as G7 nations pursue a broader deal being negotiated at the OECD. The Senate is evenly split between Democrats and Republicans.

There was "a big question mark over whether and when“ an international tax accord could be ratified in Washington, said Brian Jenn, a former US Treasury official. "I would say the prospects of Congress implementing any agreement remain highly uncertain, at best.“

Senior Republican lawmakers have lined up to slam the fledgling multilateral accord as being harmful to the competitiveness of American companies. They accused the US president