Has US president Joe Biden blown the Organisation for Economic Co-Operation and Development’s (OECD) plans for a minimum effective 15 per cent corporate tax rate worldwide out of the water? In his State of the Union speech. Biden said he wanted to see the US minimum rate upped from 15 per cent now to 21 per cent, as part of a revenue-raising package aimed at soaking big companies and billionaires.
Were this to happen it could spell trouble for Ireland, where a new minimum rate of 15 per cent has just been introduced for big companies, in line with the OECD agreement. If the US minimum rate was higher, big multinationals might face paying a top-up to Uncle Sam.
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Higher corporate taxes have long been part of the Biden agenda. He proposed such a move during his presidential term. But it never went anywhere as Congress would have voted it down. And barring a surprise sweep by Democratic candidates in November, this will continue to be the case.
So the message may be a more subtle one. If Biden wins, his team have briefed that they will want to reopen the global deal to aim for a 21 per cent minimum. If Biden can’t deliver in the US — as has happened with aspects of the current OECD deal — then this won’t go anywhere. But it will mean the current OECD deal may not bed down as an international accord.
If Donal Trump wins, meanwhile, the indications are that he would withdraw from the deal, though he has not outlined what changes he would make to the US system. This all means that whoever is in the White House, tax tensions between the US and Europe are quite likely to bubble up, with Ireland caught in the middle. How serious this would be is, as yet, impossible to tell.
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