President Trump issued a presidential memorandum stating that the global corporate minimum tax agreement has no force in the US, effectively withdrawing the country from the 2021 deal. The move comes amidst ongoing negotiations at the OECD and potential retaliatory action from other countries.
On Monday, President Donald Trump declared that the global corporate minimum tax agreement 'has no force or effect' in the United States, effectively withdrawing America from the landmark 2021 arrangement negotiated by the Biden administration with nearly 140 countries.
Trump, in a presidential memorandum issued hours after taking office, also directed the US Treasury to prepare options for 'protective measures' against countries that have or are likely to implement tax rules that disproportionately impact American companies.The European Union, Britain, and other countries have adopted the 15-percent global corporate minimum tax, but the US Congress never approved measures to align the US with it. The US currently has a roughly 10-percent global minimum tax, part of Trump's signature 2017 tax cut package passed by Republicans. However, countries that have adopted the 15-percent global minimum tax may be able to impose a 'top-up' tax on US companies paying a lower rate. Trump's memo referred to such actions as 'retaliatory.' 'Because of the Global Tax Deal and other discriminatory foreign tax practices, American companies may face retaliatory international tax regimes if the United States does not comply with foreign tax policy objectives,' the memo stated. 'This memorandum recaptures our Nation's sovereignty and economic competitiveness by clarifying that the Global Tax Deal has no force or effect in the United States.' After years of negotiations on global tax issues hosted by the Paris-based Organization for Economic Cooperation and Development (OECD) to curb competitive reductions in corporate tax rates, former US Treasury Secretary Janet Yellen agreed to the deal in October 2021. Trump's Treasury nominee Scott Bessent asserted on Thursday that adhering to the global minimum tax agreement would be a 'grave mistake.' Another aspect of the OECD negotiations focused on a new framework to share taxing rights on large, profitable multinational companies with countries where their products are sold. This effort aimed to replace unilateral digital services taxes that primarily target American technology firms, from Meta Platforms' Facebook to Apple. However, these so-called Pillar 1 talks have largely stalled, and without US participation, countries including Italy, France, Britain, Spain, and Turkey may be inclined to reinstate their digital taxes, risking retaliatory tariffs from Washington.
GLOBAL TAX CORPORATE TAX DONALD TRUMP USA OECD INTERNATIONAL TAX AGREEMENTS
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