© . FILE PHOTO: US President Joe Biden speaks at an event at the Royal Castle, amid the Russian invasion of Ukraine, in Warsaw, Poland, March 26, 2022. Slawomir Kaminski /Agencja Wyborcza.pl via REUTERS By David Lawder WASHINGTON () The US Treasury on Monday proposed a new mechanism to comply with and enforce a global minimum tax of 15% agreed by 136 countries last year, in part by denying the deduction of taxes paid in lower jurisdictions. prices. The new under-taxed profits rule, proposed as part of President Joe Biden’s fiscal 2023 budget plan, would replace the current U.S. anti-abuse tax (BEAT) with a new system that would act as a “supplementary tax” to ensure that multinational companies pay an effective tax rate of at least 15%, the Treasury said in budget documents released Monday. The global minimum tax agreement negotiated through the Organization for Economic Co-operation and Development (OECD) aims to end a downward competitive spiral in corporate rates and an erosion of government revenues, while denying tax havens. A key feature of Treasury’s proposed rule is that it would generate additional revenue by denying corporate deductions to the extent that they pay a tax rate of less than 15%, a US Treasury Department official told . In the event that U.S. subsidiaries of foreign companies use U.S. deductions and credits to reduce their effective tax rates below 15%, the proposal includes a domestic tax to make up the difference in the United States, rather than paying it to foreign countries. to give up. by other countries. The official said Treasury was willing to work with Congress to pass legislation to ensure the benefits of US tax credits and other incentives are preserved for US companies. The new plan, which applies to companies with global sales of more than $850 million, complies with the so-called “model rules” for the global minimum tax agreed in December last year. The proposal is the latest in a series of tax amendments tabled by the Treasury over the past year to negotiate and implement the sweeping global tax deal, which also includes a separate “pillar” that aims to re-allocate international tax rights. point to large technology companies and other highly profitable multinationals. The Biden administration had sought to include tax changes to implement the global minimum tax in a sweeping social and climate investment law, but that legislation stalled in Congress in late 2021. Biden’s budget aims to raise the US corporate tax rate to 28% from 21% and raise the current US minimum foreign tax rate from 10.5% from 10.5% to 20%, along with higher taxes on wealthy individuals. By including the new plan in the Treasury’s “green book” of fiscal revenue proposals, the Biden administration shows it is “still very, very committed to a global consensus on a global minimum tax,” Manal Corwin said. , head of KPMG’s Washington national tax practice and a former tax official with the United States Department of the Treasury. “From a messaging perspective it’s important because you see the Treasury at least build into their budget that they follow the global architecture,” Corwin said.