The head of the World Bank has warned world leaders against setting a global minimum tax rate for companies that is too high.
In an interview, David Malpass said he didn’t want to ascertain new rules that might hinder poor countries’ ability to draw in investment.
The 21% global minimum rate called for by US Treasury Secretary Janet Yellen “strikes me as…high”, he added.
Officials said on Wednesday they hope to reach a global tax deal by mid-year.
Ms. Yellen has said a worldwide minimum tax on companies is important to prevent a “30-year race to the bottom”, which has seen countries slash rates on companies, to woo business investments.
She is in favor of having all countries agree to a minimum tax rate of 21%. Meanwhile, the US under President Joe Biden is seeking to extend its minimum rate to twenty-eight.
To US lawmakers, Ms. Yellen has made the case that establishing a worldwide minimum tax would allow the US to stay competitive, despite that increase.
The UK is additionally looking to boost taxes on corporations from 19%, up to 25% in 2023, in what would be the primary increase since the 1970s.
Global tax deal
Earlier talks led by the Organisation for Economic Co-operation and Development (OECD) had focused on a minimum corporate rate of 12.5%.
While the ECU Commission in the week said it supported the thought of a minimum tax, officials declined to discuss a selected rate.
Some countries, like Ireland, have expressed reservations about the US proposal.
The average corporate tax rate globally is about 24%, according to the Tax Foundation. Europe has the lowest regional rate at roughly 20%.
Mr. Malpass told that he was encouraged by signs of renewed specialization in the worldwide tax talks, which have dragged on for years without coming to a resolution.
But he cautioned that world leaders must consider how a replacement global minimum tax might slot in with other proposals to tax carbon and digital services provided by tech giants – other priorities for the negotiations.
“The critical thing is to possess growth for countries around the world,” Mr. Malpass said. “Tax rates matter for everybody then there also must be a legal environment that draws new investment into the poorer countries.”
He added that Ms. Yellen’s proposal of a 21% global minimum tax “strikes me as a high corporate rate, but this is not my call”.