European Parliament backs US global minimum tax proposal

The European Parliament on Thursday welcomed a US proposal to introduce a 21 percent global minimum tax on corporations but said Europe should "go it alone" if the effort fails.

"Outdated international tax rules need to be overhauled, including a minimum effective corporate tax rate," a statement said after the non-binding resolution was passed with a big majority.

The US proposal is intended to stop what Washington calls a "race to the bottom" among countries to see who can offer the lowest rate and would unwind a historic rate cut in the US under former president Donald Trump.

Crucially, it would not only affect US tech giants such as Google and Facebook, but also non-digital big businesses such as LVMH or Volkswagen, which are European.

In Europe the idea is backed by France and Germany, but is facing questions among smaller EU member states whose economies depend on keeping taxes low to attract big companies.

"We have a moral responsibility to ensure that digital multinationals will contribute their fair share, just like all other companies and citizens," said Czech MEP Martin Hlavacek, who introduced the resolution.

The MEPs enthusiastically backed negotiations underway at the Organisation for Economic Co-operation and Development (OECD) to agree on the minimum tax, but insisted that the EU should propose its own version for Europe that targeted big tech if no breakthrough is reached this year.

But EU-wide tax policy requires unanimity by the bloc's 27 members states and earlier attempts for a digital tax were shot down by Ireland, which is the low-tax home for Google, Facebook and Apple in Europe.