International support grows for raising taxes to fund recovery

WASHINGTON: The IMF and United States on Wednesday gave a boost to the international campaign to raise taxes on wealthy firms that have done well during the pandemic in order to finance recovery efforts.

The renewed support for tax changes comes as G20 finance ministers said they would continue work on a minimum corporate tax aimed at undermining the use of tax havens internationally, with a deal possible by July.

The plan also has the support of France and Germany but US President Joe Biden's administration on Wednesday took the first step by announcing it intended to raise domestic corporate taxes and clamp down on loopholes to ensure US companies making huge profits, at home or overseas, pay a minimum amount to the government.

"Destructive tax competition will only end when enough major economies stop undercutting one another and agree to a global minimum tax," US Treasury Secretary Janet Yellen said.

Yellen this week also said she wants the G20 to reach a global agreement on taxation to prevent firms from evading levies by establishing headquarters in countries with lower rates -- a practice prevalent among tech companies.