US will be exempt from global tax deal targeting profits of large multinationals | Global economy
Nearly 150 countries have agreed on a historic plan to stop major global companies from shifting profits to low-tax jurisdictions, but the United States will be exempt from the deal, drawing the ire of tax transparency groups.
The plan, finalized by the Organization for Economic Cooperation and Development, excludes large U.S.-based multinational corporations from the 15% global minimum tax, after negotiations between the Trump administration and other G7 members.
OECD Secretary-General Mathias Cormann called the agreement a “landmark decision in international tax cooperation” that “improves tax certainty, reduces complexity and protects tax bases.”
Scott Bessent, the US Treasury Secretary, called the agreement “a historic victory in preserving American sovereignty and protecting American workers and businesses from extraterritorial excesses.”
The most recent version of the deal waters down a landmark 2021 deal that set a minimum global corporate tax of 15%. The idea was to prevent multinational companies, including Apple and Nike, from using accounting and legal maneuvers to shift their profits to or even zero tax havens.
These havens are usually places like Bermuda and the Cayman Islands, where companies do little or no business.
Donald Trump criticized the 2021 deal negotiated by the Biden administration, saying it was not enforceable in the United States. The Trump administration then threatened to impose retaliatory taxes on countries that imposed levies on U.S. companies under the 2021 deal.
Former Treasury Secretary Janet Yellen was a key driver of the 2021 OECD global tax deal and made the corporate minimum tax one of her top priorities. The plan was widely criticized by congressional Republicans at the time, who argued it would make the United States less competitive in a global economy.
In June, the Trump administration renegotiated the deal when congressional Republicans struck down a so-called tax revenge provision of Trump’s big tax and spending bill, which would have allowed the federal government to impose taxes on foreign-owned companies, as well as investors from countries deemed to charge “unfair foreign taxes” on U.S. companies.
Tax transparency groups criticized the OECD’s amended plan.
“This deal jeopardizes nearly a decade of global progress on corporate taxes, with the sole aim of allowing America’s largest and most profitable companies to keep their profits in tax havens,” said Zorka Milin, policy director of Fact Coalition, a tax transparency nonprofit.
Tax watchdogs say the minimum tax is meant to end an international race to the bottom on corporate taxes that has led multinational companies to book their profits in countries with low tax rates.
With Associated Press and Reuters
