US Treasury Secretary Janet Yellen on Monday said she was working with G20 countries to adopt a global minimum corporate tax rate that would stem the erosion of government revenues.

A collective effort by the world's 20 major economies would help end the "thirty-year race to the bottom on corporate tax rates," Yellen said at a virtual event hosted by the Chicago Council on Global Affairs.

"Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations," she said.

Yellen's speech comes days after President Joe Biden announced plans to raise the corporate tax to finance a massive $2 trillion infrastructure and jobs program.

Biden's plan would raise the US corporate tax to 28% and the minimum for multinationals to 21%, partially reversing the previous administration's cut from 35% in its 2017 tax legislation.

The Biden administration's proposed tax hike has received pushback from Republicans and some Democrats.

The critics argue that the higher rates would make the US less attractive to companies, that would then relocate to countries with lower corporate tax rates.

A global minimum would at least partially offset any disadvantage that might arise from the proposed increase in the US rates.

Ending tax havens

The new Treasury chief said the practice of seeking tax havens erodes government revenues and undermines an economy's competitiveness.

She said that for companies and economies to remain competitive it was important to "end the pressures of tax competition and corporate tax base erosion."

Governments must make sure they "have stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing the government," Yellen added.

G20 finance ministers are expected to discuss global tax issues, including taxes for digital services during a virtual meeting on Wednesday.

A G20 agreement on a global minimum tax would boost negotiations underway at the 37-nation Organization for Economic Cooperation and Development (OECD) on similar minimums.

"Taxes matter to development, and it's important that the world get it right," World Bank President David Malpass told CNBC television.

adi/aw (AFP, AP, Reuters)