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India And China Blocking ‘Pillar 1’ Global Tax Deal, Yellen Says

US Treasury Secretary says India is refusing to ‘engage’ on talks on a global deal about taxes on US-based digital giants, while China has been ‘absent’ in push for OECD corporate tax agreement

US Treasury Secretary Janet Yellen Yellen speaks at the G7 finance minister and central bank governors' meeting in Stresa, Italy (Reuters).


The US is trying to save part of the global corporate tax deal focused on highly profitable multinational firms, but India is refusing to engage on issues important to US interests, US Treasury Secretary Janet Yellen said on Friday.

Yellen said in an interview on the sidelines of a G7 finance leaders meeting in Italy that China has also been “all but absent” in the negotiations to finalize “Pillar 1” of the OECD corporate tax deal reached in principle in 2021 that involves 140 countries.

“We are actively engaged in this negotiation,” to meet an end-June deadline for the deal, Yellen said. “We’re committed to doing everything we possibly can to make it work.”


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Earlier on Friday, Italian Finance Minister Giancarlo Giorgetti told reporters that the Pillar 1 negotiations were set to fail, citing objections from the US, India and China.

The Pillar 1 negotiations are mainly aimed at reallocating the taxing right on US-based digital giants, allowing about $200 billion of corporate profits to be taxed in the countries where the companies do business.

A second pillar of the tax deal, the 15% global minimum tax on corporate profits is separately being implemented by many countries, but the US Congress has not ratified it.

Yellen said there are two “red line” issues for the US in the talks, related to transfer pricing and the “Amount B” system for simplifying the calculation of transfer pricing.

While most countries support the US position on these issues, “we have a problem with India. India will not engage with us,” she said.

A collapse of the Pillar 1 negotiations could prompt the return of digital services taxes in some countries and reignite potential trade tensions.

Prior to the 2021 initial deal, US trade authorities threatened 25% tariffs on more than $2 billion worth of imports from Italy, Austria, Britain, France, Spain and Turkey, from cosmetics to handbags. These were put on hold after the countries agreed to suspend their digital taxes while details of the arrangement were worked out.

Italy wants to negotiate an agreement with Washington that would stop these tariffs, which are temporarily frozen until June, while also keeping its levy in place, an Italian official said on Friday.


  • Reuters with additional editing by Jim Pollard



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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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