This week in tax: Janet Yellen raises hope for digital tax agreement

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

This week in tax: Janet Yellen raises hope for digital tax agreement

Janet Yellen, US Secretary of the Treasury

The appointment of Janet Yellen to US Secretary of the Treasury has created global optimism that an international agreement on the digital tax framework may be possible this year.

Yellen was voted-in unanimously by the US Senate Finance Committee to replace Steven Mnuchin, who suspended OECD-led talks with other countries on the two-pillar digital tax approach in June 2020. Corporate confidence is high on Yellen restarting negotiations after she stressed that efficient taxation of multinational companies was a priority.

“Working in the context of the OECD negotiations on global taxation, we have much greater leverage to keep our American firms competitive if we avoid a race to the bottom in corporate taxation more globally,” said Yellen at the US Senate on January 19, showing her support for pillar two regarding a global minimum tax.

Yellen’s appointment on January 22 also makes a carbon tax more likely to become part of US policy in the near future. The former chair of the Federal Reserve is a long-time advocate of carbon taxes and was a member of the Climate Leadership Council (CLC) for many years.

As the OECD waits for the Biden administration to take shape, the pace of digital tax reform has not slowed down. The public meeting of the OECD/G20 Inclusive Framework on January 27/28 saw finance ministers from Canada, Germany, Italy, Indonesia, Jamaica and the UK stress the need for multilateral digital tax solution, but more work still needs to be done.

Before the event, the OECD's Head of Transfer Pricing Stewart Brant spoke to ITR about his team's work on pillar one in 2021 and a new knowledge-sharing initiative.

Meanwhile, the Inclusive Framework (IF) meeting also involved discussions on the global economic outlook and impact of COVID-19, while senior international experts examined how tax can help deliver on the UN Sustainable Development Goals.

Other discussions were focused on tax morale among businesses and how to strengthen it, the future of international taxation, tax certainty, tax transparency and tax administration 3.0. A further informal day of briefings on the OECD work is being held on January 29.

Although Yellen did not attend the IF meeting, she has been busy in her first week holding conversations with finance ministers in France, Germany, the UK and others to discuss cooperation on fiscal matters. Nevertheless, trade tensions are still expected to continue between the US and other countries, especially as countries like Spain push ahead with digital services tax.

In other news, Nigeria’s inaugural Annual National Tax Dialogue meeting in Abuja, organised by the Federal Inland Revenue Service (FIRS), brought together regional and national government officials and tax experts to discuss taxation in the post-COVID economy.

The event resulted in the federal government being advised to “explore data and intelligence in order to ease tax collection and improve its revenue base”.

In addition, there have been a number of important tax developments:

Coming up next week

As we enter February next week, there will be a lot to look forward to, including the release of ITR’s 10th edition of the Global Tax 50.

On February 1, there will be a public consultation meeting to discuss the proposals for the 2020 review of the Action 14 minimum standard at the OECD. Consultation responses on the mutual agreement procedure (MAP) were published on January 14 ahead of the public event, which discussed:

  • Experiences with, and views on, the status of dispute resolution and suggestions for improvements, including experiences with MAPs in those jurisdictions that obtained a deferral; and

  • How to strengthen the Action 14 minimum standard and MAP statistics reporting framework.

Mark Martin and Thomas Bettge of KPMG in the US have explored how adopting these proposals could improve dispute resolution in an article published by ITR.

Also on February 1, India’s Finance Minister Nirmala Sitharaman will present her second annual budget. A lot is expected from the finance minister to support businesses in the post-COVID recovery period, as well as a number of changes to improve the country’s indirect tax regime.

ITR will be providing detailed coverage of the budget announcement, including a webinar with Dhruva Advisors and Taxsutra, as well as articles on how companies are adapting their tax plans in response to the budget.

Meanwhile, ITR will also be examining Uber’s suggestion on how in-house tax policies could help companies align with the UN SDGs and improve on their environmental records.

more across site & bottom lb ros

More from across our site

US partner Matthew Chen was named as potentially the first overseas PwC staffer implicated in the tax leaks scandal, in a dramatic week for the ‘big four’ firm
PwC alleged it has suffered identifiable loss and damage arising out of a former partner's unauthorised use of confidential information; in other news, Forvis Mazars unveiled its next UK CEO
Luxembourg saw the highest increase in tax-to-GDP ratio out of OECD countries in 2023, according to the organisation’s new Revenue Statistics report
Ryan’s VAT practice leader for Europe tells ITR about promoting kindness, playing the violincello and why tax being boring is a ‘ridiculous’ idea
Technology is on the way to relieve tax advisers tired by onerous pillar two preparations, says Russell Gammon of Tax Systems
A high number of granted APAs demonstrates the Italian tax authorities' commitment to resolving TP issues proactively, experts say
Malta risks ceding tax revenues to jurisdictions that adopt the global minimum tax sooner, the IMF said
The UK and what has been dubbed its ‘second empire’ have been found to be responsible for 26% of all countries’ tax losses by the Tax Justice Network
Ireland offers more than just its competitive corporate tax environment but a reduction in the US rate under a Trump administration could affect the country, experts tell ITR
The ‘big four’ firm was originally prohibited from tendering for government work until December 1 due to its tax leaks scandal, but ongoing investigations into the matter have seen the date extended
Gift this article