The Organization for Economic Cooperation and Development announced Monday that 147 nations have finalized a two-track agreement on a global minimum tax for corporations.
The agreement, which updates an earlier blueprint from 2021, defines a 15% minimum global tax rate for multinational firms in each country in which they operate, with exemptions for large U.S. companies.
President Trump threatened to pull the U.S. out of the tax framework last year, and Republican lawmakers threatened to impose a “revenge tax” on foreign companies in response to their home-country tax policies, pushing negotiators to create a two-track system that addresses U.S. concerns. The final agreement blocks foreign countries from imposing taxes on local operations of U.S. corporations.
“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.
In a joint statement, Republican House Ways and Means Committee Chairman Jason Smith and Senate Finance Committee Chairman Mike Crapo said the agreement respects “U.S. tax sovereignty” and warned that they were ready to retaliate if countries “slow walk” its implementation.
Manal Corwin, the OECD tax official who led the effort, said keeping the U.S. in the agreement helped affirm an international commitment to maintaining minimum tax rates, even if the U.S. is partially exempt.
“This outcome is a far better outcome than one that would have involved threats of retaliation or countries doing their own thing,” said Corwin, per The Wall Street Journal.
Critics, though, expressed disappointment that the U.S. had won exemptions from the agreement. Zorka Milin, policy director at the Financial Accountability and Corporate Transparency Coalition, a non-partisan group based in Washington that advocates for tax fairness and transparency, said the agreement will allow large U.S. corporations to continue to park profits in tax havens. “The Trump administration has chosen to prioritize maintaining rock-bottom taxes for big corporations to the detriment of ordinary Americans and our allies across the globe,” she said.
Alex Cobham, chief executive at the Tax Justice Network, a British group that seeks to reduce international tax avoidance, said the agreement would cost some countries billions of dollars in lost revenues. “OECD countries, including EU countries and the UK, just forfeited to Donald Trump their sovereign right to tax businesses operating within their own borders,” Cobham said in a statement. “This is an alarming subjugation of state sovereignty — and yet it is being spun as a landmark tax deal.”