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U.S. multinationals will be exempted from paying more overseas corporate taxes under a final deal reached by the Organization for Economic Co-operation and Development.
The OECD announced on Monday that nearly 150 countries had agreed on the plan, originally developed in 2021, to stop large multinationals from shifting profits to low-tax countries, no matter where in the world they operate.
After presidential negotiations, a revised version excludes large U.S. multinationals from the 15% global minimum tax rate Donald Trumpgovernments and other members of the G7 rich nations.
OECD Secretary-General Matthias Koeman said in a statement that the agreement was a “landmark decision in international tax cooperation” that “enhances tax certainty, reduces complexity and protects the tax base.”
U.S. Treasury Secretary Scott Bessant Calling the agreement “a historic victory to safeguard U.S. sovereignty and protect American workers and businesses from extraterritorial overreach.”
The latest version of the agreement downplays a landmark 2021 deal that set a minimum global corporate tax of 15%. The idea is to stop multinational companies including Apple and Nike from using accounting and legal tricks to shift income to low-tax or tax-free havens.
These safe havens are usually places like Bermuda and cayman islandsthese companies actually have little or no business.
former finance minister Janet Yellen is a key driver of the 2021 OECD global tax deal and has made corporate minimum tax one of her top priorities. The plan was widely criticized by Congress republican Who says this will make the United States less competitive in the global economy.
The Trump administration renegotiated the deal in June after congressional Republicans rolled back so-called retaliatory tax provisions in Trump’s massive tax and spending bill that would have allowed the federal government to tax companies with foreign owners and investors from countries deemed to impose “unfair foreign taxes” on U.S. companies.
Tax transparency groups criticized the OECD’s revised plan.
“This deal risks nearly a decade of global corporate tax progress and will only allow the largest, most profitable U.S. companies to park their profits in tax havens,” said Zorka Milin, policy director at the tax transparency nonprofit FACT Coalition.
Tax regulators argue that a minimum tax should deter international corporate tax competition, which leads multinationals to book profits in low-tax countries.
Congressional Republicans applauded the final deal. “Today marks another important milestone in ‘America First’ and unwinding the Biden administration’s unilateral global tax rebate policy,” Senate Finance Committee Chairman Mike Crapo, R-Idaho, and House Ways and Means Committee Chairman Jason Smith, R-Mo., said in a joint statement.