The Group of Seven (G7) nations announced on Saturday that they have reached a significant agreement to exempt United States multinational corporations from the global minimum tax regime applied by other countries. This marks a notable diplomatic success for the administration of President Donald Trump, which has lobbied extensively for such a carve-out.
According to a statement issued by Canada, which currently holds the G7’s rotating presidency, the accord introduces a “side-by-side” mechanism. Under this framework, US multinational enterprises will be taxed solely within the United States on both domestic and overseas earnings. This dual-track approach is positioned as a stabilising force in the global tax landscape.
The agreement, the G7 noted, was facilitated in part by proposed revisions to the US international tax system contained in President Trump’s flagship legislative package — a comprehensive domestic bill still under consideration in Congress. These pending tax changes were key to shaping the compromise.
“The side-by-side system could provide greater stability and certainty in the international tax system moving forward,” the statement said, emphasising a long-term vision of reduced friction in cross-border tax administration.
The development is the latest evolution in global tax reform efforts that have gained traction since 2021, when nearly 140 countries reached a landmark accord under the aegis of the Organisation for Economic Co-operation and Development (OECD). That initiative, which drew heavy criticism from President Trump at the time, was built on two foundational “pillars”. The second of these mandates a minimum global corporate tax rate of 15%.
Although the G7 has expressed unanimous support for the exemption of US firms, the final decision rests with the OECD, which must formally endorse any deviation from the global framework. In its communiqué, the G7 stated its commitment to “expeditiously reaching a solution that is acceptable and implementable to all.”
On Thursday, US Treasury Secretary Scott Bessent foreshadowed the announcement, citing progress toward a “joint understanding among G7 countries that defends American interests.” He also made an appeal to US legislators to eliminate Section 899 from the Trump administration’s legislative agenda.
Section 899, informally labelled a “revenge tax”, would permit Washington to impose additional levies on foreign-owned corporations and investors originating from jurisdictions perceived to enforce discriminatory taxation on American businesses. The clause has provoked apprehension among global investors, who argue that it could deter foreign direct investment into the US.
The agreement reached by the G7 signals an important pivot in global tax diplomacy and underscores the influence of US domestic policy debates on international fiscal architecture.
-AFP
