Federal Finance Minister and Deputy Chancellor Olaf Schultz speaks to the media upon his arrival at an informal meeting of the Eurogroup on May 21, 2021.
Carlos Costa | Agence France-Presse | Getty Images
LONDON – Germany on Friday warmly welcomed the US proposal that companies around the world would be forced to pay at least 15% tax on their profits.
The U.S. Treasury Department released its plans on Thursday, saying international negotiations should be ambitious – meaning the number could end up above 15%. The corporate tax rate in the United States is currently 21%, but President Joe Biden plans to raise it to 28% and wants higher tax rates in the rest of the world.
“This is indeed a big step forward,” Federal Finance Minister Olaf Schultz said Friday morning about the US announcement. “I’m very happy now this morning.”
“We are happy that it looks like we have a solution this summer.” “The new administration in the United States is making a difference because it said it is possible,” Schultz told reporters in Lisbon, Portugal.
“This is the best chance for global tax reform (which will fight the race to the bottom),” he added.
This issue can be controversial within the European Union, as corporate tax rates vary in different member states and thus can attract well-known companies. For example, the Irish tax rate can be as high as 12.5%, while the French tax rate can be as high as 31%.
In April, Irish Treasury Minister Paschal Donohue said that smaller countries are allowed to offer lower tax rates because they do not have the same capacity as larger economies, The Guardian reported.