Business lobbyists and Republican lawmakers have warned that doing so will make American companies less competitive than their international counterparts and lead to more offshoring.
Treasury Secretary Janet L. Yellen and other administration officials have said that getting other countries to go along with a base tax rate on overseas profits would minimize any disadvantage to American companies and make them less likely to move their operations to countries with lower taxes.
Ms. Yellen described the agreement as “significant” and “unprecedented.”
“That global minimum tax would end the race to the bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world,” Ms. Yellen said in a statement. “The global minimum tax would also help the global economy thrive, by leveling the playing field for businesses and encouraging countries to compete on positive bases, such as educating and training our work forces and investing in research and development and infrastructure.”
The Group of 7 delegations, which represent Britain, Canada, France, Germany, Italy, Japan and the United States, negotiated late into Friday to hash out details of how the new tax systems would work and the language in the statement.
France, which had been pushing for a tax rate above 15 percent, wanted to ensure that there remains flexibility for the tax to be higher. The United States was pushing European countries to eliminate their digital services taxes, which the administration says unfairly target American technology companies. France, Italy and Britain have resisted abandoning those taxes until the agreement is finished and in place — a process that could take up to four years.
The joint statement, or communiqué, released on Saturday suggested that the digital taxes would remain in place for now.
“We will provide for appropriate coordination between the application of the new international tax rules and the removal of all digital services taxes, and other relevant similar measures, on all companies,” the statement said.
Read More: Global Tax Deal Reached Among G7 Nations