The proposed reforms of the global tax system from Mr Biden’s administration would provide countries with taxing rights over the profits of US tech giants, which would be in addition to a new minimum corporation tax. These radical plans could stop the likes of Google, Amazon, Facebook and Apple moving their profits from where they process sales to tax havens around the world. The minimum global corporation tax, which the US has proposed would be 21 percent, would prop up the plans.
But under these plans, countries such as Ireland, the Netherlands and Luxembourg would be hit hard as profits moved from the UK to low tax jurisdictions would be taxed at the new minimum rate.
Brexiteer Sir John Redwood warned the Irish corporation tax rate could nearly double, and said the proposal “could have quite an impact on investment flows”.
He tweeted: “Joe Biden’s proposal for a minimum world corporation tax rate of 21 percent would mean a near doubling of the Irish rate of 12.5 percent.
“I assume the EU supports this as a way to a more level playing field.
“Could have quite an impact on investment flows.”
But campaigners have claimed the global minimum corporation tax from Mr Biden and his Government would raise at least £13.5billion a year in Britain.
Tax Pressure UK calculated that a global tax rate of 20 percent would raise the huge amount for the UK exchequer while increasing the rate to 15 percent would raise more than £8billion.
Robert Palmer, executive director of Tax Justice UK, said: “A new minimum corporate tax rate would bring in billions of pounds to support public services and would deal a blow to tax dodging.”
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In a statement, Ms Yellen said the total IRS budget of $13.2billion would also include an additional $900 million for tax enforcement in the 2022 financial year.
The Treasury is looking to ramp up revenues by reducing the “tax gap,”.
This is the difference between taxes legally owed and those collected.
Ms Yellen insisted the budget request will increase fairness in the tax system.
She said: “It will make paying taxes a more seamless process for millions of Americans.
“And it makes sure that corporations actually pay what they owe.”