An international deal on a corporate minimum tax is within reach. Courageous CEOs can help deliver it
Paul Polman, business leader, campaigner and co-author of "Net-Positive"
May 27, 2021
For a CEO, where else might you find an investment that simultaneously prepares our future leaders and workforce, secures our communities and global supply chains and funds the infrastructure that gets our goods and services to market?
—Paul Polman
Campaigners for a global minimum rate on corporate taxes may have felt disappointed last week. The policy, which would deter multinationals from flocking to countries with the lowest rates, received a boost when President Biden’s administration came out for a 21% floor. U.S. Treasury officials have since rowed back, however, calling instead for a rate of “at least 15%.” This appears to be a pragmatic move aimed at getting a deal through the G7.
I agree with the campaigners: 21% would be better. When I was CEO of Unilever, we always sought to make a fair contribution, usually paying corporate income tax between 23% and 25%. We were proud to do so. But let’s not make the best the enemy of the good. International negotiations on business taxes are notoriously fraught. The United States is mercifully back at the table, and we are finally in reach of a deal between some of the world’s biggest economies — a foundation on which we can then build.
France, Germany and Italy are all on board. Notwithstanding some inevitable opposition, a G7 accord could pave the way for global agreement at the OECD later this year. Along with a minimum corporate tax rate, this agreement could ensure that U.S. tech giants and other big firms pay more tax in the countries in which they operate, not just those where their profits are booked.
This shift, if it happens, will present huge opportunities for business.