India’s Finance Secretary indicates a reassessment of the OECD tax deal’s viability following the US withdrawal, raising concerns about its effectiveness.
India will rethink joining the global tax deal. The US has decided to withdraw from the pact. This makes it tough to put into action. The Finance Secretary, Tuhin Kanta Pandey, shared this news.
Donald Trump said the tax deal is not valid in the US. This happened on January 20. The OECD worked hard to get 140 nations to agree. They aimed for a minimum tax of 15% on big companies.
Pandey said the US leaving creates doubt. The deal won’t work well without the US. He spoke about India’s view on the global tax agreement.
Pandey said the US is key to the tax deal. He spoke at an Assocham event after the Budget.
Pandey noted India had some reservations earlier. They mostly agreed with the general plan. He added that India hasn’t passed related laws. Some nations already have. India will assess the benefits now that the US is out. Almost 140 countries signed the OECD’s tax deal in 2021.
The plan aimed to stop a “race to the bottom” on taxes. It wanted to reduce tax avoidance across borders. Pillar 1 moves profits of big firms to where they earn money. Pillar 2 sets a 15% global minimum tax for companies.
About 50 places have adopted or are close to adopting the rules. They must now change course. They need to adapt to the new situation.
The OECD’s Pillar 2 aims for a 15% minimum tax rate. This is for every country that signs on. The US tax rules might clash with this new minimum.
The US worries some firms may pay tax twice on the same income. The new rules could change how taxes are figured. This might increase taxes for US firms abroad.
