FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023. REUTERS/Kevin Lamarque/File Photo
WASHINGTON (Reuters) – The U.S. Treasury Department on Thursday said it has proposed raising the effective minimum rate that U.S. corporations pay on overseas income to 21% from about 10.5% as it aims to bring the United States into compliance with a global corporate minimum tax deal.
The changes to the current “GILTI” minimum tax and a new global corporate minimum tax are contained in the Treasury’s explanations of revenue proposals associated with President Joe Biden’s fiscal 2024 budget plan released on Thursday.
The proposed budget contains trillions of dollars in tax hikes on wealthy Americans and corporations, including an increase in the general corporate rate to 28% from the current 21%.
The United States has not implemented a 2021 agreement by some 137 countries to enact corporate minimum taxes of at least 15% aimed at ending competition among countries to slash corporate taxes to attract business investment.
There is little chance that the Biden administration will be able to increase the current Global Intangible Low-Taxed Income (GILTI) tax rate on overseas income with Republicans in control of the House of Representatives, many of whom oppose the global tax deal.
But the so-called Treasury Green Book provides some new proposals on that front, including an increase in the GILTI rate to 14% from the current 10.5%. But certain exemptions for investments in tangible assets in the overseas minimum tax would be eliminated, which Treasury officials said would increase the effective GILTI rate to 21% while eliminating incentives for overseas investment.