The cook-off organised by the City of Luxembourg is a subtle reminder that when life gives you lemons, you make lemonades… well maybe this time something more special to celebrate the National day fol...
Pierre Gramegna, Luxembourg finance minister (DP), said this week that a global minimum tax could be good for Luxembourg. Library photo: Sebastien Goossens
Finance minister Pierre Gramegna has signalled his support for a global minimum corporate tax floated by US treasury secretary Janet Yellen this week, saying countries should work within the OECD framework to avoid a “race to the bottom.”
Yellen on Monday said the US wants to begin talks with G20 countries to introduce a minimum global corporate tax rate. The Biden administration, as part of plans to raise money for a $2trn infrastructure bill, plans to increase the corporate tax rate, as well as make it harder for US companies to shift profits and jobs to low-tax countries.
“I think the US proposal comes exactly at the right time. It’s a proposal that shows the United States wants to engage more in multilateralism,” Gramegna (DP) said speaking to Bloomberg. “If we want to have a new international tax landscape, we cannot do it all alone. We need to do it all together in the OECD framework.”
The OECD is already working on a two-pillar strategy within its base erosion and profit shifting (BEPS) action plan. The framework--which brings together 137 countries--addresses nexus and profit allocation (where taxes should be paid and what profits should be taxed) as well as ensuring a minimum level of taxation.
“We need more solidarity. We need to break the mould of many multinationals trying to reduce their taxation close to zero,” Gramega said. “We must avoid a race to the bottom in the field of taxation and Luxembourg is very pleased that this discussion is taking place.”
Pressed on countries like Luxembourg and Ireland using taxation as a competitiveness toll, Gramegna said that “taxation will play less of a role in the future in attracting companies if we have a common framework,” citing Luxembourg’s AAA status as a draw.
“The global direction is the right one,” Gramegna said, even though he conceded that EU countries like Luxembourg or Ireland “have specific considerations to value and put forward that need to be taking into consideration.”
In an interview with Luxembourg broadcaster RTL, Gramegna reiterated his support for the measure, saying it would help calm down global discussions around tax dumping, which would also benefit the grand duchy.