The OECD has finalized an agreement allowing US multinational corporations to be exempt from the global minimum tax rate of 15%, creating a major exception within the framework of international tax reform.

The United States, along with more than 100 other countries, has officially finalized an agreement that will exempt American businesses from certain foreign taxes, concluding a months-long effort to create an exception for American multinational corporations to global minimum tax rates.

Under this agreement, multinational corporations based in the United States will be exempt from the 15% global minimum tariff negotiated within the framework of the Organization for Economic Cooperation and Development (OECD). Previously, President Donald Trump withdrew the US from implementing this tariff, which was negotiated under the administration of former President Joe Biden.

Under the new agreement, other countries will effectively be prevented from imposing additional taxes on the overseas branches and subsidiaries of US multinational corporations to offset profits that are supposedly taxed at lower rates in other jurisdictions.

U.S. Treasury Secretary Scott Bessent secured a consensus from allies in the Group of Seven (G7) industrialized nations by June 2025. In return, Bessent persuaded Republican members of Congress to remove the so-called “retaliatory tax” provision that had been included in President Trump’s “Big and Beautiful” tax bill – a document that Congress passed in 2025.

US officials argue that American businesses are effectively subject to a minimum tax regime, through a 15% federal minimum corporate income tax rate applied to companies with profits of $1 billion or more, along with an international tax system levied on foreign profits at approximately 12.6-14%.

The agreement on a global minimum tax was finalized amid rising tensions surrounding digital services taxes, which the European Union (EU) and several other countries use to target large technology corporations. The US government argues that American businesses, including Alphabet (Google's parent company), Meta Platforms (which owns Facebook, Instagram, and WhatsApp), and Amazon.com, are being unfairly targeted.

The global minimum tax is designed to prevent multinational corporations from avoiding taxes by locating operations and recording profits in low-tax regions. The OECD-led proposal sets a minimum tax rate of 15% for corporations with revenues of €750 million (approximately $1.1 billion) or more.

To date, around 60 countries have enacted this framework, including most EU member states, along with the UK, Australia, Canada, Japan, and South Korea.

According to OECD estimates, a global minimum tax program could generate approximately $220 billion in revenue for governments worldwide. This framework aims to require corporations to pay at least 15% in taxes in each country where they operate, while establishing a mechanism that allows another country to collect a "tax catch-up" if the jurisdiction where the business is headquartered does not apply the full 15% tax rate.

Source: VTV

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