In a significant development, India is currently evaluating the feasibility of a landmark global corporate minimum tax deal following the United States' withdrawal. The deal, initially reached in 2021, saw agreement among 140 nations aiming to establish a uniform corporate tax rate worldwide. However, the recent departure of the US, announced by former President Donald Trump, has cast doubts on its future success.
Donald Trump declared last month that the global corporate minimum tax deal "has no force or effect" within the United States, a statement that effectively removed the nation from the agreement. This decision has prompted India to reassess whether the ambitious accord can function without the participation of one of the world's largest economies.
The evaluation is being conducted by a senior bureaucrat from India's finance ministry, headquartered in New Delhi. The assessment seeks to determine the potential global impact and viability of continuing with the deal in the absence of US involvement. The finance ministry's analysis will play a crucial role in shaping India's stance on this pivotal international agreement.
The global corporate minimum tax deal was hailed as a groundbreaking effort to combat tax avoidance by multinational corporations, ensuring they pay a fair share of taxes regardless of their operational locations. The accord aimed to curb profit shifting and prevent countries from engaging in a "race to the bottom" by offering increasingly lower tax rates to attract corporate investments.
India's reassessment underscores the importance of collective action and cooperation among nations to address global economic challenges. The withdrawal of the US has raised concerns about the effectiveness and enforcement of the agreement, prompting countries like India to carefully evaluate their participation.
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