Nearly 150 countries have agreed on a landmark plan to stop large global companies shifting profits to low-tax jurisdictions, but the US will be exempt from the deal, angering tax transparency groups.
The plan, finalised by the Organisation for Economic Cooperation and Development, excludes large US-based multinational corporations from the 15% global minimum tax after negotiations between the Trump administration and other members of the G7.
The OECD secretary general, Mathias Cormann, described the agreement as a “landmark decision in international tax cooperation” that “enhances tax certainty, reduces complexity, and protects tax bases”.
Scott Bessent, the US treasury secretary, called the deal “a historic victory in preserving US sovereignty and protecting American workers and businesses from extraterritorial overreach.”
Cormann was elected to head the OECD in 2021 with Donald Trump’s support. A right wing former Australian finance minister, who previously argued in favour of fossil fuels and against green energy targets, Cormann is the last remaining head of a major international organisation to be appointed with the US president’s backing.
The most recent version of the deal waters down a landmark 2021 agreement that set a minimum global corporate tax of 15%. The idea was to stop multinational corporations, including Apple and Nike, from using accounting and legal manoeuvres to shift earnings to low- or no-tax havens.
Those havens are typically places like Bermuda and the Cayman Islands, where the companies actually do little or no business.
Donald Trump criticised the 2021 deal negotiated by the Biden administration, saying it wasn’t applicable in the US. The Trump administration then threatened retaliatory taxes against countries that imposed levies on US firms 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 panned by congressional Republicans at the time, who said it would make the US less competitive in a global economy.
The Trump administration in June re-negotiated the deal when congressional Republicans rolled back a so-called revenge tax provision from Trump’s big tax and spending bill that would have allowed the federal government to impose taxes on companies with foreign owners, as well as on investors from countries judged as charging “unfair foreign taxes” on US companies.
Tax transparency groups have criticised the amended OECD plan.
“This deal risks nearly a decade of global progress on corporate taxation only to allow the largest, most profitable American companies to keep parking profits in tax havens,” said Zorka Milin, policy director at the Fact Coalition, a tax transparency nonprofit.
Tax watchdogs argue the minimum tax is supposed to halt an international race to the bottom for corporate taxation that has led multinational businesses to book their profits in countries with low tax rates.
With Associated Press and Reuters
