WASHINGTON (AP) — U.S. multinational corporations will be exempted from paying more corporate taxes overseas in a deal finalized by the Organization for Economic Cooperation and Development.
The OECD announced Monday that nearly 150 countries have agreed on the plan, initially crafted in 2021, to stop large global companies from shifting profits to low-tax countries, no matter where they operate in the world.
The amended version excludes large U.S.-based multinational corporations from the 15% global minimum tax after negotiations between President Donald Trump’s administration and other members of the Group of Seven wealthy nations.
OECD Secretary-General Mathias Cormann said in a statement that the agreement is a “landmark decision in international tax co-operation” and “enhances tax certainty, reduces complexity, and protects tax bases.”
U.S. Treasury Secretary Scott Bessent called the agreement “a historic victory in preserving U.S. sovereignty and protecting American workers and businesses from extraterritorial overreach.”
The most recent version of the deal waters down a landmark 2021 agreement that set a minimum global corporate tax of 15%. The idea was to stop multinational corporations, including Apple and Nike, from using accounting and legal maneuvers to shift earnings to low- or no-tax havens.
Those havens are typically places like Bermuda and the Cayman Islands, where the companies actually do little or no business.
Former Treasury Secretary Janet Yellen was a key driver of the 2021 OECD global tax deal and made the corporate minimum tax one of her top priorities. The plan was widely panned by congressional Republicans who said it would make the U.S. less competitive in a global economy.
The Trump administration in June re-negotiated the deal when congressional Republicans rolled back a so-called revenge tax provision from Trump’s big tax and spending bill that would have allowed the federal government to impose taxes on companies with foreign owners, as well as on investors from countries judged as charging “unfair foreign taxes” on U.S. companies.
Tax transparency groups have criticized the amended OECD plan.
“This deal risks nearly a decade of global progress on corporate taxation only to allow the largest, most profitable American companies to keep parking profits in tax havens,” said Zorka Milin, policy director at the FACT Coalition, a tax transparency nonprofit.
Tax watchdogs argue the minimum tax is supposed to halt an international race to the bottom for corporate taxation that has led multinational businesses to book their profits in countries with low tax rates.
Congressional Republicans applauded the finalized deal. Senate Finance Committee Chair Mike Crapo, R-Idaho, and House Ways and Means Committee Chair Jason Smith, R-Mo., said in a joint statement: “Today marks another significant milestone in putting America First and unwinding the Biden Administration’s unilateral global tax surrender.”