The Group of Seven (G7) nations announced an agreement that would allow U.S. multinational corporations to be excluded from certain provisions of the 2021 global minimum tax framework. This move, confirmed in a joint statement released by Canada on Saturday, comes as part of a broader understanding to bring stability to international tax arrangements.
The agreement introduces a “side-by-side” framework in which U.S. tax rules would continue to apply to American companies operating abroad, rather than subjecting them to additional taxes levied by foreign governments. This compromise follows the decision by the U.S. Senate to remove Section 899, a provision included in President Donald Trump’s proposed spending legislation that would have imposed retaliatory taxes on foreign firms.
Treasury Secretary Scott Bessent stated the development reflects progress toward preserving U.S. tax sovereignty while maintaining cooperation with international partners. “We look forward to continued engagement with the Inclusive Framework,” the Treasury Department posted on X.
The global minimum tax deal, brokered under the OECD in 2021, was designed to prevent multinational firms from shifting profits to jurisdictions with low or no corporate tax. The second pillar of the agreement proposed a minimum 15% tax rate, regardless of a company’s home country. Though supported by the Biden administration at the time, Trump has taken a different approach since reentering office, emphasizing tax autonomy for the U.S.
The G7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, has agreed that a side-by-side model could offer a workable alternative. Under this model, U.S. companies would continue to be taxed solely under domestic rules, rather than facing extra layers of taxation overseas.
British officials also welcomed the arrangement, suggesting it would bring greater predictability for firms concerned about sudden increases in tax liabilities. U.K. Chancellor Rachel Reeves noted that while the deal provides businesses with clarity, continued efforts are necessary to address tax avoidance on a global scale.
Section 899, the provision that was ultimately removed, had been referred to by some lawmakers as a “revenge tax.” It was intended to apply tariffs to firms from jurisdictions implementing taxes perceived as unfair toward American businesses, such as digital services taxes or diverted profits taxes. The proposal raised concerns that it could discourage foreign investment into the U.S.
The removal of Section 899 was a key condition for reaching consensus with other G7 members. Lawmakers including Sen. Mike Crapo and Rep. Jason Smith indicated their support for the move, saying it helps maintain a balance between global coordination and U.S. legislative priorities.
While the agreement among G7 nations is not binding, it sets the stage for ongoing discussions within the broader OECD framework. Final implementation depends on approval from all participating jurisdictions in the Inclusive Framework, which involves nearly 140 countries.
For now, the U.S. exemption appears to mark a shift in direction, reflecting efforts to reconcile international cooperation with national policy goals in the realm of corporate taxation.
The Group of Seven (G7) nations = Green
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