VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

Jakarta. The International Monetary Fund has long favored adoption of a global minimum tax on corporate profits, the Fund’s chief economist, Gita Gopinath, told reporters on Tuesday, calling tax avoidance a troubling issue for the global economy.

Gopinath said current disparities in national corporate tax rates had triggered “a large amount” of tax shifting and tax avoidance, reducing the tax base on which governments could collect revenues to fund needed economic and social spending.

“It is a big concern,” Gopinath told reporters during an online briefing. “We are very much in favor of a global minimum corporate tax.”

French Finance Minister Bruno Le Maire said on Tuesday a global deal on cross-border taxation was within reach as he welcomed a pledge by U.S. Treasury Secretary Janet Yellen to work on a global corporate minimum rate.

Gopinath said the IMF had not taken a position on the ideal level for such a tax rate, adding that governments would need to replenish their coffers after massive spending to contain the COVID-19 pandemic and mitigate its economic impact.

“The hope is that they will move forward better to have more inclusive, sustainable, green economies, and that would require measures both on the revenue side and on the expenditure side,” she said, adding that each country would have to carefully tailor its own actions on the tax front.

Gopinath said the IMF was still studying the Biden administration’s proposal to raise the corporate tax rate to 28%, but noted that the former Trump administration’s decision to lower that tax rate from 35% to 21% in 2017 had had less impact on investment than initially expected.

U.S. President Joe Biden on Monday said there was “no evidence” that raising the corporate tax rate by seven percentage points would drive business abroad.

White House press secretary Jen Psaki noted that the 28% rate would be lower than it was at any time since World War Two. (Reuters)