U.S. Tax Plan Welcomed by Luxembourg as Going in Right Direction

(Bloomberg) --

A U.S. offer for a global deal on corporate taxes is well timed and a positive step toward promoting solidarity in the treatment of multinational companies, according to Luxembourg Finance Minister Pierre Gramegna.

“The proposals of the Biden administration go in the right direction, and in the best interests of both Europe and the United States,” he said in a Bloomberg Television interview with Francine Lacqua and Matthew Miller.

“We need more solidarity, we need to break the mold of many multinationals trying to reduce their taxation close to zero, and that’s been recognized by all observers: we must avoid a race to the bottom,” Gramegna said, adding that Luxembourg is “very pleased that this discussion is taking place.”

The U.S. offer to the nearly 140 countries participating in Organization for Economic Cooperation and Development talks suggests nations should be able to tax more corporate profits based on revenues within their borders. Current options attempted to define business models and industries subject to a levy, with an emphasis on technology.

“If we want to have a new international tax landscape, we cannot do it all alone, we should do it all together in the OECD framework,” Gramegna said. “It’s a proposal that shows that the U.S. wants to engage more in multilateralism, which is quite a change.”

Gramegna added a note of caution that Luxembourg and other European counterparts might still have reservations with the plan if it advances.

“It’s clear that some European countries, for example small open economies like the Benelux countries, Scandinavian countries, Ireland, have specific considerations to value and to put forward that need to be taken into consideration,” he said. “But I think the global direction is the right one.”

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