Global Tax
Why in news?
The Group of Seven (G7) countries have backed the proposal to impose a common global corporate tax, aimed at preventing multinational businesses from evading taxes and to teach a lesson to tax havens due to the low-rate jurisdictions.
Agreement on a common tax rate was reached at the G7 finance ministers meeting held in Buckingham on June 5 .
The Biden administration wants to enhance the U.S. corporate tax rate to 28%, so it has proposed a global minimum of 21% - double the rate on the current GILTI tax.
What is the GILTI tax.?
GILTI is income earned abroad by US-controlled CFCs—i.e., controlled subsidiaries of the U.S.
The Trump administration in order to capture revenues lost to tax havens with a U.S. corporate offshore minimum tax in 2017.
The "Global Intangible Low-Taxed Income," or GILTI, the tax rate was only 10.5% - half the domestic corporate tax rate.
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