G-7 agrees to exempt US multinationals from global minimum tax
Sign up now: Get ST's newsletters delivered to your inbox
US President Donald Trump was deeply critical of the landmark minimum global tax rate of 15 per cent agreed by 140 countries in 2021.
PHOTO: NYTIMES
Follow topic:
- G-7 nations agreed to exempt US multinational companies from a global minimum tax, benefiting them through a "side-by-side" system.
- The agreement hinges on "recently proposed changes to the US international tax system" in Trump's policy Bill, currently debated in Congress.
- US Treasury Secretary Bessent sought a "joint understanding" and urged removal of Section 899, a "revenge tax" on foreign investors.
AI generated
LONDON - The Group of Seven (G-7) nations said on June 28 they have agreed to exempt US multinational companies from a global minimum tax imposed by other countries – a win for President Donald Trump’s government, which pushed hard for the compromise.
The deal will see US companies benefit from a “side-by-side” solution under which they will only be taxed at home, on both domestic and foreign profits, the G-7 said, in a statement released by Canada, which holds the group’s rotating presidency.
The agreement was reached in part due to “recently proposed changes to the US international tax system” included in Mr Trump’s signature domestic policy Bill, which is still being debated in Congress, the statement said.
The side-by-side system could “provide greater stability and certainty in the international tax system moving forward,” it added.
Nearly 140 countries struck a landmark deal in 2021
That agreement, deeply criticised by Mr Trump, includes two “pillars,” the second of which sets a minimum global tax rate of 15 per cent.
The OECD must ultimately decide to exempt the US companies from that tax – or not.
The G-7 said it looked forward to “expeditiously reaching a solution that is acceptable and implementable to all.”
On June 26, US Treasury Secretary Scott Bessent had signalled that a “joint understanding among G-7 countries that defends American interests” was in the works.
He also asked US lawmakers to “to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill” – Mr Trump’s policy mega-Bill.
Section 899 has been dubbed a “revenge tax,” allowing the government to impose levies on firms with foreign owners and on investors from countries deemed to impose unfair taxes on US businesses.
The clause sparked concern that it would inhibit foreign companies from investing in the United States. AFP
