Trump withdraws US from agreement on global minimum tax rate for multinationals

The agreement on the global minimum tax rate for multinationals “has no effect or effect” on , in practice as stated yesterday (20.01.2025) the American new president , withdrawing his country from this international agreement – a milestone of 2021 negotiated by the government of his predecessor Joe Biden with nearly 140 countries. With his presidential memo a few hours after he took power, Trump also ordered the Treasury to prepare options for “protection measures” against countries that have introduced – or are likely to adopt – tax rules that disproportionately affect US businesses. CORVERSE The Member States of the European Union, Britain and other countries have adopted the global minimum tax rate of 15% for multinationals. However, the American Congress never approved the measures needed to become part of national legislation in the US. In this country the minimum tax rate is roughly 10%, a level set with the historic tax reduction package passed in 2017 with the approval of Republicans. However, countries that have adopted the minimum tax rate of 15% may be able to collect ‘additional’ tax from American companies which pay taxes at lower rates. In Donald Trump’s memorandum these actions are described as “retribution”. ‘Because of the global tax agreement and other discriminatory foreign tax practices, American companies may face international tax retaliation regimes if the US does not comply with foreign tax policy objectives’, in the text. CORVERSE The presidential memorandum aims to “recover” the US’s “national sovereignty and economic competitiveness”, as it “clarifies” that the international agreement “has no power or effect” in the country, insists. Following a long-term deadlock in the tax negotiations on multinational companies in the OECD, which is based in Paris, designed to end competitive factor reductions, former US Finance Minister Janet Yelen, accepted this agreement in October 2021. Scott Bessed, whom Mr Trump has named his government’s finance minister — the appointment is subject to Senate approval —, has stated that applying the global minimum tax rate to multinational companies would be a “serious mistake”. Part of the negotiation in the OECD concerned new regulation to share tax revenue with countries where their products are sold. This was intended to tax fairer companies such as Meta (Facebook) and Apple. But talks on the so-called ‘first pillar’ have not ended anywhere and, without US participation, countries such as Italy, France, Britain, Spain and Turkey may decide to bring their own digital services taxes back into effect, which would spark retaliation from Washington. Source: RES-AE