G20 signs off on global tax reform deal. Finance ministers representing the Group of 20 large economies have approved a plan for taxing multinational companies that includes a global minimum tax rate of 15 percent. The Organization for Economic and Cooperative Development (OECD) shepherded the plan and 130 countries have embraced it, though some businesses and lower-tax countries remain skeptical. The International Monetary Fund wants the deal simplified to increase participation. The OECD hopes to resolve many details before October. Learn more about international tax reform tomorrow at TPC’s event featuring OECD’s Pascal Saint-Amans.
Speaking of details… In addition to the 14 percent minimum tax, the plan includes a new mechanism to allow countries to tax large profitable companies where they sell goods and services. However, a multilateral tax agreement will take time to negotiate. US Treasury Secretary Janet Yellen told reporters it was on a "slightly slower track" than the global corporate minimum tax but hoped a multilateral agreement could be developed by the spring of 2022.
Digital tax delay? The Financial Times reports (paywall) that the European Commission may delay its digital tax until the fall. The US has been pressuring the group to withdraw the proposed levy. Commission President Ursula von der Leyen will meet with Yellen today .before the Treasury Secretary discusses the issue with eurozone finance ministers.
Will a big domestic spending and tax bill come closer to Christmas than Labor Day? President Biden and many Democrats have been pushing for congressional action on an infrastructure bill and/or a separate domestic spending plan before the August recess. With only two weeks left, that seems impossible. Will the bills now get caught up in the always-slow annual budget process? It seems increasingly likely.
Meanwhile, the crypto-rich have a new way to reduce their taxes. A company called Plan B Passport helps its clients secure second passports in countries such as St. Kitts, Antigua, Dominica, Vanuatu, Grenada, Saint Lucia, or Portugal, none of which impose capital gains taxes on crypto-currency transactions. US citizens or green card holders have to pay US tax on any capital gains, regardless of where they live. One customer told CNBC that the $180,000 cost of his St. Kitts passport was totally worth it.
IRS grants tax-exempt status to Christians Engaged. The agency had denied nonprofit status for the group, which urges Christians to pray for elected officials and vote. In its initial denial, the IRS said that Christians Engaged promoted the sanctity of life, biblical marriage, and biblical justice, which were associated principally with political platforms. The IRS reversed itself last week after criticism from conservative groups and Republican senators. Utah’s Sen. Mike Lee said “Religious groups must be free to teach their beliefs without fear of government retaliation.”
In case you missed them on TaxVox… TPC’s John Buhl explains why sales tax holidays are a headache for tax administrators, shoppers, and retailers; Janet Holtzblatt recommends a way for Congress to fund multi-year investments in IRS infrastructure; Bill Gale discusses Clare Haldeman’s and his new report on the supply-side effects of the Tax Cuts and Jobs Act (there weren’t any through 2019); and the Tax Hound considers whether tax-exempt hospitals should provide more charity care.
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