By Divya Chowdhury
April 15 (Reuters) - The final agreement for a global minimum tax rate between the G20 countries could likely come at around 15%, a compromise between the current Irish rate of 12.5% and United States' proposed 21%, a global tax expert said on Thursday.
U.S. Treasury Secretary Janet Yellen has thrown the weight of the U.S. government behind a push for a global corporate minimum tax rate, possibly carving a path to a long-sought deal updating international tax rules for the first time in a generation.
Daniel Bunn, vice president of global projects at the Washington D.C.-based Tax Foundation, said it was unclear if such a tax would be prescriptive or binding, and there was a possibility that countries could have separate domestic tax rates for purely local businesses that will be lower than the global minimum tax rate.
That means "multinational (firms) will, just because they operate across borders, face a larger tax burden," Bunn told the Reuters Global Markets Forum.
President Joe Biden's administration wants to raise the U.S. corporate tax rate to 28%, so it has proposed a global minimum of 21%.
"The 21% minimum rate will be too high to get agreement either in a purely U.S. legislative context or at the OECD (Organisation for Economic Cooperation and Development)/G20 (level)," Bunn said.
The average corporate tax of the mostly wealthy 37 countries in the OECD group is 23%.
Bunn also said the U.S. Congress could raise the domestic corporate tax rate to around 25% and the global intangible low-taxed income, or GILTI, to about 16%, "which it is already scheduled to increase to."
GILTI, a provision of former President Donald Trump's tax overhaul, imposes an effective 10.5% tax rate on income from tax havens, meant to discourage multinational corporations from avoiding U.S. taxes by holding intangible assets such as software patents abroad in low-tax countries, and is half the current domestic corporate tax rate.
"It's unclear what all the political negotiations will lead to," Bunn said.
"It's possible there will still be some variety in 'minimum taxes' when all is settled, rather than just one form of a global minimum tax," he added. (This interview was conducted in the Reuters Global Markets Forum, a chat room hosted on the Refinitiv Messenger platform. Sign up here to join GMF: https://refini.tv/33uoFoQ) (Reporting by Divya Chowdhury in Mumbai; Editing by Steve Orlofsky)