‘India and China hindering ‘Pillar 1’ tax deal,’ says US Treasury’s Janet Yellen

US Treasury Secretary Janet Yellen is working to save a component of the global corporate tax agreement targeting highly profitable multinational corporations. India refuses to discuss issues important to US interests, while China has been ‘all but absent’ in negotiations.

Livemint
First Published25 May 2024
U.S. Secretary of the Treasury Janet Yellen attends the G7 Finance Ministers and Central Bank Governors' Meeting in Stresa, Italy May 24, 2024. REUTERS/Massimo Pinca
U.S. Secretary of the Treasury Janet Yellen attends the G7 Finance Ministers and Central Bank Governors’ Meeting in Stresa, Italy May 24, 2024. REUTERS/Massimo Pinca(REUTERS)

US Treasury Secretary Janet Yellen stated on Friday that she is working to save a component of the global corporate tax agreement targeting highly profitable multinational corporations, and added that “India is refusing to engage on issues important to US interests”.

Yellen told Reuters in an interview on the sidelines of a G7 finance leaders meeting in Italy that China also has been “all but absent” in the negotiations to finalize “Pillar 1” of the OECD corporate tax deal reached in principle in 2021 that involves 140 countries.

"We are actively engaged in this negotiation," to meet an end-June deadline for the deal, Yellen told Reuters. “We're committed to doing everything we possibly can to make it work.”

Also Read: Yellen ‘Feeling Good’ About G-7 Alignment on Russian Assets

Earlier on Friday, Italian Finance Minister Giancarlo Giorgetti told reporters that the Pillar 1 negotiations were set to fail, citing objections from the U.S., India and China.

The Pillar 1 negotiations primarily focus on redistributing the taxing authority concerning US-based digital giants, potentially enabling around $200 billion of corporate profits to be taxed in the nations where these companies operate.

In addition to Pillar 1, the tax deal includes a second pillar involving the implementation of a 15% global minimum tax on corporate profits, which many countries are independently adopting. However, the ratification of this measure by the US Congress is still pending.

Yellen said there are two “red line” issues for the US in the talks, related to transfer pricing and the "Amount B" system for simplifying the calculation of transfer pricing.

Also Read: Did Japan intervene to boost Yen? US official Janet Yellen cautions…

While most countries support the US position on these issues, “we have a problem with India. India will not engage with us,” she said.

The breakdown of the Pillar 1 negotiations could lead to the reinstatement of digital services taxes in certain countries, potentially sparking renewed trade tensions.

Before the initial deal in 2021, US trade authorities had warned of imposing 25% tariffs on over $2 billion worth of imports from Italy, Austria, Britain, France, Spain, and Turkey, covering products ranging from cosmetics to handbags.

However, these threats were paused after the involved countries agreed to suspend their digital taxes while awaiting the resolution of the agreement's specifics.

Italy wants to negotiate an agreement with Washington that would stop these tariffs, which are temporarily frozen until June, while also keeping its levy in place, an Italian official told Reuters on Friday.

(With inputs from Reuters)

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
HomeNewsworld‘India and China hindering ‘Pillar 1’ tax deal,’ says US Treasury’s Janet Yellen

Most Active Stocks

Bharat Electronics

318.25
10:23 AM | 18 JUN 2024
8.7 (2.81%)

Indus Towers

343.90
10:18 AM | 18 JUN 2024
3.1 (0.91%)

Tata Steel

181.15
10:14 AM | 18 JUN 2024
-1.9 (-1.04%)

Zee Entertainment Enterprises

160.85
10:29 AM | 18 JUN 2024
-3.15 (-1.92%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

M M T C

83.80
10:23 AM | 18 JUN 2024
7.5 (9.83%)

Cochin Shipyard

2,327.30
10:27 AM | 18 JUN 2024
205.55 (9.69%)

Ramkrishna Forgings

816.00
09:59 AM | 18 JUN 2024
71.1 (9.54%)

Metro Brands

1,254.35
09:59 AM | 18 JUN 2024
104 (9.04%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    73,519.00-431.00
    Chennai
    73,806.00646.00
    Delhi
    73,519.00-144.00
    Kolkata
    73,375.00359.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    103.94/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsPremiumInstant LoanGet App