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The world’s leading economy has agreed to a deal that will allow the largest US companies to avoid paying more corporate taxes overseas and to avoid doubting the situation of the largest global tax transactions for the century.
An agreement between Washington and other members of major countries’ G7 groups could fundamentally change the Landmark 2021 agreement to set a global minimum tax to crack down on avoidance by multinational corporations.
The G7 said on Saturday it agreed to a “lined-line solution” of taxation that exempts American companies from parts of the new global tax system for taxes paid in the US.
The G7 added that the contract “promotes further progress in stabilizing the international tax system,” including a “constructive dialogue” to maintain “tax sovereignty of all countries.”
According to those familiar with the debate, the new arrangement has reached the 2021 minimum tax agreement, but is expected to be discussed in the coming weeks at the OECD, an international organisation controlled by G7 members.
“It’s a slam dunk for the US,” said Robert Gruder, tax lawyer and contributor editor for Tax Analyst, a news service for tax professionals. “I think they’re celebrating it by doing high fives at the Treasury.”
This shift came after the US included President Donald Trump’s sweeping “big beautiful bill” that would allow President Donald Trump to retaliate against alleged discriminatory taxes elsewhere by imposing a “revenge tax” on foreign investment.
Ahead of the G7 statement, Treasury Secretary Scott Bessent said he would ask Congress to remove revenge tax measures from US law due to impending changes to the OECD transaction.
He added that these revisions will save US companies on paying $100 million in taxes to foreign governments over the next decade.
Markus Meinzer, policy director for campaign group Tax Justice Network, has named G7 transactions a “hazardous cave” that leaves minimum tax transactions “dead.”
He added: “The US is about to be exempt from twisting your arms. This makes tax transactions completely useless. Ships with US-sized holes in the hull won’t float.”
However, OECD tax director Manal Corwin described the G7 statement as non-binding, adding that 147 countries need to propose at the OECD level.
“Only the G7 can’t make this call,” she added.
To prevent tax avoidance by multinationals and renew the international tax system in the digital age, OECD agreements have reached over 135 countries to establish a global minimum tax in 2021.
Last year, it established a minimum tax rate of 15% of global profits for the largest multinational companies from the US and elsewhere implemented by several countries.
Under provisions that particularly offended US Republicans, the OECD agreement allowed other countries to collect taxes from American companies that are considered “tax included.”
However, the OECD rejects the idea that other countries could now recede from the global minimum tax. Or, US companies are advantageous to companies in other countries that have adopted the administration.
“If anything, what we were before was uncertainty and unable to move forward due to various threats of retaliation, which made it extremely difficult and put a waiver (of the lowest tax) at risk,” Corwin said.
She argued that the idea that US tax systems are “a light touch” is “not necessarily accurate,” and that there are “many ways” that are stricter.
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French officials added that the G7 Accord “has made some nods to the United States (their tax laws help them to be obedient.”
However, Nobel Economics Laureate Joseph Stiglitz, who is also co-chair of the Independent Committee for International Corporate Tax Reform, said the G7 agreement indicates that the government “goes ahead of the interests of small businesses around the planet, their own citizens and the average people.”
He added: “It is unacceptable that some governments have chosen to abandon public revenue.
The G7 statement also anticipated continued debate regarding taxation in the digital economy. The digital services tax has been a point of tension between the US and other countries eager to increase taxation on the US tech giants.
US President Donald Trump said Friday that he was canceling trade talks with Canada after Ottawa said he would impose new taxes on tech companies.
