US Reaches Global Minimum Tax Agreement With OECD

• U.S. headquartered multinationals will remain subject to only U.S. global minimum taxes.
• G7 and the U.S. had agreed a deal in June last year to exempt some U.S. companies from an existing global agreement. 
• Earlier in the day more than 145 countries agreed to amend the 2021 global minimum corporate tax agreement where it kept 15% as minimum tax on the multinationals.
   

The U.S. Treasury on Monday said that it has reached an agreement with more than 145 countries in the Organisation for Economic Cooperation and Development (OECD)/G20 inclusive framework to have U.S. headquartered multinationals remain subject to only U.S. global minimum taxes and exempted them from pillar two. 

Pillar two aims to ensure an appropriate level of tax is paid by the multinationals on the income arising in each jurisdiction where they operate. 

Donald Trump last January criticized the 2021 deal negotiated by the Biden administration, saying it wasn’t applicable to the U.S.

The U.S. Treasury said that the agreement protects the value of the U.S. Research and Development credit and other Congressionally approved incentives for investment and job creation in the United States. The U.S. Treasury will continue engaging with foreign countries to ensure full implementation of the agreement, it added. 

G7 and the U.S. had agreed to a deal in June last year to exempt some U.S. companies from an existing global agreement. 

15% Global Tax Agreement 

Earlier in the day more than 145 countries agreed to amend the 2021 global minimum corporate tax agreement where it kept 15% as minimum tax on the multinationals.   

The deal excluded U.S.-based multinationals from the 15% global minimum tax negotiated through the OECD.

Under the agreement, other nations will be blocked from imposing additional taxes on foreign subsidiaries of U.S. multinationals to compensate for profits that are under-taxed in the given jurisdiction. 

The Invesco QQQ Trust ETF and SPDR S&P 500 ETF Trust were up 1% on Monday. 

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