In a controversial move that has drawn sharp criticism from transparency advocates, the United States has secured an exemption from a landmark international agreement designed to impose a global minimum corporate tax rate of 15%.
A Watered-Down Landmark Deal
The Organisation for Economic Co-operation and Development (OECD) has finalised a new agreement, which significantly weakens a pioneering 2021 pact signed by nearly 150 countries. The original deal aimed to halt large multinational corporations from shifting profits to low-tax jurisdictions, known as tax havens.
The revised plan, negotiated by the Trump administration with other G7 members, ensures that US-headquartered companies will only be subject to American global minimum tax rules. This effectively carves out major American firms from the international framework.
Political Wrangling and Sovereignty Claims
The 2021 agreement, championed by former US Treasury Secretary Janet Yellen, faced immediate opposition from congressional Republicans and later from Donald Trump. The Trump administration threatened retaliatory taxes against any country that tried to levy the global minimum tax on US companies.
US Treasury Secretary Scott Bessent hailed the new arrangement as a "historic victory in preserving US sovereignty" and protecting American businesses from "extraterritorial overreach." OECD Secretary General Mathias Cormann, meanwhile, described the overall agreement as a landmark for international tax cooperation that enhances certainty and reduces complexity.
Backlash from Tax Watchdogs
Tax transparency groups have reacted with anger and dismay, arguing the exemption undermines the entire purpose of the global minimum tax. The policy was intended to stop a damaging race to the bottom on corporate tax rates, which encourages firms to book profits in places like Bermuda or the Cayman Islands where they do little real business.
"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 non-profit Fact Coalition.
The amendment was finalised in June after Congressional Republicans rolled back a 'revenge tax' provision, which would have empowered the US government to tax companies with foreign owners from nations deemed to impose unfair levies on American firms.
