The United States and other G7 countries have reached an agreement that will exempt American companies from paying the global minimum tax for corporations.
The agreement aims to increase the stability of the international tax system while recognizing existing U.S. tax laws, according to a statement from the Canadian Ministry of Finance, which currently holds the G7 presidency.
US companies will not pay global corporate tax
In response, Washington is expected to abandon the “tax vengeance” envisaged in US President Donald Trump’s “great, beautiful” bill to cut taxes and increase government spending.
Now watching
Article 899 of this document allowed taxes to be raised (+5 percentage points per year for four years) for individuals and companies from countries that pursue “discriminatory” tax policies.
One such policy could well be a minimum tax for large corporations, which is being actively promoted by the Organisation for Economic Co-operation and Development (OECD), which includes 38 countries, including most members of the European Union.
US Treasury Secretary Scott Bessent, according to Axios, has already asked Congress to exclude the “tax retaliation” clause from Trump’s bill, which passed a procedural vote in the US Senate on June 28.
“After several months of productive dialogue (…) we will announce an agreement among the G7 countries that protects American interests,” Bessent wrote on June 26 on the X network.
The New York Times newspaper cited an estimate that over 10 years, “tax vengeance” could bring the US budget more than $100 billion (that is, more than €85 billion).
German Finance Minister and Vice Chancellor Lars Klingbeil said the agreement reached between Washington and other G7 countries would “continue the fight against tax havens, tax evasion and tax dumping.”
What is known about the global tax for corporations
On July 2, 2021, the OECD announced that 130 countries representing 90% of the global economy had agreed to introduce a global minimum tax for large corporations with a rate of “at least 15%.”
The aim of the innovation was to put an end to the situation where IT giants such as Apple, Google, Amazon or Facebook paid taxes only at their place of registration, and not in other countries where they received income.
This led to many companies registering their headquarters in jurisdictions with lower tax rates.
Later, the finance ministers of the Group of 20 (G20), including the United States, agreed on this tax reform at their meeting in Venice. The final declaration of the meeting stated that they wanted to create “a more stable and fair international tax architecture.”
At that time, the future German Chancellor Olaf Scholz, who was then serving as the FRG's Minister of Finance, called this decision “historic”.
“The importance of this moment could be judged by the fact that at the end of the debate (…) there was applause,” he told journalists.
