The U.S. and more than 100 other countries finalized an agreement that would exempt American companies from some foreign taxes, the culmination of a months-long effort to create a carve-out from a corporate global minimum levy.
Processing Content
The deal excludes U.S.-based multinational corporations from the 15% global minimum tax negotiated through the Organization for Economic Cooperation & Development, or OECD. President Donald Trump last year pulled the U.S. out of a framework to implement that levy negotiated during President Joe Biden’s administration.
Under the agreement, other countries would be effectively blocked from imposing additional taxes on foreign subsidiaries of U.S. multinationals to compensate for profits that are under-taxed in other jurisdictions.
“This side-by-side agreement recognizes the tax sovereignty of the United States over the worldwide operations of U.S. companies and the tax sovereignty of other countries over business activity within their own borders,” Treasury Secretary Scott Bessent said Monday in a statement.
Bessent secured an agreement from Group of Seven allies in June to exempt American companies in exchange for persuading congressional Republicans to remove a “revenge tax” provision that had been included in a draft of Trump’s “One Big, Beautiful” tax bill that passed Congress in 2025.
U.S. officials made the case that American companies already face a minimum tax regime, both through a 15% federal corporate minimum tax imposed on companies with at least $1 billion in profits and the US international tax regime, which imposes levies ranging from 12.6% to 14% on a corporation’s foreign profits.
“In close coordination with Congress, Treasury worked to reach agreement with the more than 145 countries in the OECD/G-20 Inclusive Framework to have U.S.-headquartered companies remain subject to only U.S. global minimum taxes while exempting them from Pillar Two,” Bessent said.
The agreement on the global minimum tax comes amid rising tensions over digital taxes — levies that the European Union and other nations have used to target technology companies. The U.S. government complains that U.S. companies, including Alphabet Inc.’s Google, Meta Platforms Inc. and Amazon.com Inc., are being unfairly targeted.
Minimum tax rules
The global minimum tax was created to prevent multinational companies from dodging tax bills by locating operations and booking income in low-tax countries. The proposal negotiated through the OECD would impose a 15% effective rate on multinationals with at least €750 million in revenue. About 60 countries have enacted local versions of the framework, including the vast majority of EU members, the UK, Australia, Canada, Japan and South Korea.
The OECD has estimated the tax program would generate $220 billion in revenue to governments worldwide.
The framework aims for companies to pay at least 15% in every country where they operate. The plan also has enforcement rules that allow other countries to collect tax from a company if its local jurisdiction isn’t charging at least a 15% rate.
The agreement to exempt U.S. companies effectively sidelines threats by congressional Republicans to revive the revenge tax plan, which would have allowed the U.S. Treasury to increase levies on companies from jurisdictions deemed to have imposed “discriminatory” taxes on American entities.
That plan was deeply unpopular on Wall Street and critics warned it would have a chilling effect on foreign investment in the U.S.
