Tax havens in the Breezy Islands of the Caribbean have also refused to sign, including Barbados, Saint Vincent and the Grenadines. Hungary and Estonia, anxious to preserve their ultra-low tax regimes, have joined the dissidents, as have Kenya, Nigeria, Peru and Sri Lanka.
A block of reluctance means “nothing is agreed until everything is agreed,” said Barbara Angus, head of global tax policy at accounting firm EY and former chief tax adviser to the House Ways and Means Committee. “They have a huge amount of technical work to do,” she added, “and now it is clear that they also have additional political work to do in order to see if they can bring these other countries on board. . “
France, which has led the charge of a tax on digital giants in particular, has indicated it will work to align reluctant countries. “I will ask them to make all the necessary efforts to adhere to this historic agreement,” said Finance Minister Bruno Le Maire.
Administration officials have said they hope an implementing provision in the framework, which reflects the main features of one of Biden’s proposals to increase taxes for companies based in countries with low tax rate, would help to involve the resistant countries in the agreement.
Officials had hoped to seal the deal last year, but their efforts have been stunted by the pandemic and a shift in the position of the Trump administration, which effectively sought to allow some U.S. companies to choose their tax treatment in the whole world. Mr. Biden’s team dropped that insistence.
Ms. Yellen presented the framework as a victory for tax fairness, saying that decades of competition between countries to lower tax rates in order to entice businesses “not only have failed to attract new businesses, they have also deprived countries of funding for important investments like infrastructure, education and efforts to fight the pandemic.
Instead of this race to cut tariffs, she said, “America will be in a competition that we can win; we judged on the competence of our workers and the strength of our infrastructure.