Biden wants to set a global minimum tax. The G7 could provide a crucial boost

Treasury Secretary Janet Yellen heads to a meeting of Group of Seven finance ministers in London on Friday and Saturday looking to build support from many of the world's top economies — an important step in the administration's efforts to rewrite international tax rules and discourage American companies from booking earnings abroad.

G7 finance ministers are expected to back the US plan during the summit, according to a Reuters report citing a US Treasury official. Washington's proposal will likely get a full endorsement when G7 leaders including President Joe Biden gather in the United Kingdom next week, the news agency reported.

Last month, the US Treasury proposed a global minimum tax of at least 15%, aiming to tackle an unwieldy international system rife with loopholes. Establishing a minimum rate could help discourage companies from shifting their profits to countries where they would pay less tax.

"With the global corporate minimum tax functionally set at zero today, there has been a race to the bottom on corporate taxes, undermining the United States' and other countries' ability to raise the revenue needed to make critical investments," the US Treasury said in a statement on May 20.

While countries like France and Germany have indicated they are on board with the plan, the United Kingdom has been holding out. British finance minister Rishi Sunak told Reuters on Thursday that the US proposal could work but more still needs to be done to hammer out the details.

An endorsement from the G7 could help accelerate parallel tax negotiations among roughly 140 countries that are being led by the Organization for Economic Cooperation and Development.

Ireland, which has successfully recruited global companies including big US tech firms by offering a corporate tax rate of just 12.5%, is one country that has expressed significant reservations over the Biden proposal.

Biden's plan to pay for at least $1.4 billion in new infrastructure spending hinges in large part on his ability to garner backing for a global minimum tax on corporations that increases payments to the Treasury.