Yellen urges Polish PM to strike international tax deal

WARSAW — Treasury Secretary Janet Yellen pushed for Poland to push ahead with the European Union’s implementation of a global minimum tax during a series of meetings on Monday, saying the two sides had discussed the possibility of link the minimum tax to an overhaul of the international tax authority.

Ms Yellen met Polish Prime Minister Mateusz Morawiecki and Finance Minister Magdalena Rzeczkowska on Monday as she tried to unlock Polish support to approve the 15% minimum tax on large multinational corporations. Poland is the only EU27 country to have approved the implementation of the agreement, which more than 130 countries created during talks last year.

Ms Yellen said she had told Polish officials they would benefit under the plan to establish a minimum business tax for each country in which they operate.

“We strongly believe that it is in Poland’s interest to be part of it. So we had very good, frank discussions,” she said, adding that there were “certain technical issues that we will continue to talk to them about, to resolve”.

Poland has been pushing for negotiators to first move forward on a parallel pillar of the international talks: moving tax authority from countries that host the headquarters and intellectual property of multinational companies to countries where the companies have customers. Negotiations on this part of the deal are continuing and votes in Congress would likely not take place until 2023. Meanwhile, the US and many EU countries have been pushing to first approve the global minimum tax.

Ms Yellen said she was open to the possibility of linking the two parts of the agreement. Pillar 1 of the agreement is the reallocation of tax authority, and Pillar 2 is the global minimum tax.

“They wanted to link pillars 1 and 2 somehow, which we’re open to discussing, but I don’t think it’s practical to have a strong link between them.” she declared.

Because the minimum tax agreement would allow nations to collect additional taxes from companies operating in countries that have not implemented the 15% minimum rate, European approval of the agreement could give US lawmakers more assurance of progress and put more pressure on the US to enact its part into law. Otherwise, US companies could face higher taxes, without generating revenue for the US government.

Congress is also expected to approve the minimum tax rate. Democrats broadly support the idea and have long planned to include the global minimum tax in a broader economic package to increase spending on climate, health and education programs. But that bill failed to pass last year, leaving the minimum tax legislative path murky.

While in Warsaw on Monday, Ms Yellen also toured a World Central Kitchen installation. The organization, founded by chef José Andrés, is dedicated to feeding people who fled the war in Ukraine. She also visited a museum on the history of the Jewish people in Poland. Ms Yellen, who is Jewish and whose paternal family emigrated from Poland, compared American and Polish efforts to resist the Nazis during World War II to current efforts to curb Russia’s war in Ukraine.

“We are firm in our determination to hold Russia accountable and to strengthen the hand of the Ukrainian people at every turn,” she said.

Ms. Yellen’s meetings in Warsaw marked the start of a week-long trip to Europe that culminated in a meeting of senior finance officials from the Group of 7 Major Economies in Bonn, Germany. Ms Yellen has helped lead efforts to punish Russia for its invasion of Ukraine, coordinating with allies a series of sanctions efforts, and her trip comes as the EU considers its sixth round of sanctions against Russia.

The European Union has proposed an embargo on Russian oil imports, a measure which Ms Yellen said could increase energy prices globally while allowing Russia to generate significant energy revenues.

Write to Andrew Duehren at [email protected]

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