The US Treasury secretary is optimistic that EU holdouts from the global tax agreement will get on board in the coming months, after she held meetings with European finance ministers in Brussels.
Janet Yellen said her sense was that the EU countries that have refused thus far to sign up to the deal struck at the beginning of July “want to find a way to get to yes”.
Ireland, Hungary and Estonia are among the eight countries around the world that declined to sign up when the OECD hammered out the accord. Officials are now preparing for further talks ahead of an October target date for the remaining details to be thrashed out.
“My message is that this is an agreement that is historic and very much in the interests of all countries, and it is important that everyone try to get on board,” Yellen said in a roundtable with journalists on Tuesday. She pointed out that there are now several months to address countries’ individual concerns.
Asked about the position of Ireland, which has been seeking to defend its 12.5 per cent corporate tax rate, Yellen said she believed it could lift its rate somewhat and still remain competitive. “Our belief in the US is that Ireland has very strong advantages as a location,” she said, noting its overall business environment and highly educated workforce.
Yellen has been conducting her first tour of the EU as Treasury secretary, and over the weekend attended a meeting of G20 finance ministers in Venice at which the global tax deal won endorsement. She attended a meeting of the eurogroup in Brussels on Monday.
Yellen also welcomed the EU’s decision to delay its proposed digital levy until the autumn, rather than proposing it next week as previously planned.
Brussels has been working on its digital levy as part of a set of tax measures aimed at raising fresh sources of revenue for the European Commission, in order to help it pay off the €800bn it is set to raise for its recovery fund.
But Yellen had been urging Brussels to shelve the idea, because the US fears that a go-it-alone EU approach would threaten the global tax talks. The risk is that any levy that looks as if it is targeting tech companies would provoke a backlash on Capitol Hill.
The delay, said Yellen, will allow extra time to determine the measures permitted under the agreement and those that are not. “This is a delicate time in the US negotiations and it avoids throwing something into the negotiations that would be unclear and could complicate our progress,” she said.