A revised global tax agreement, finalized by the Organization for Economic Cooperation and Development (OECD), will exempt U.S. multinational corporations from a 15% global minimum tax. The deal, initially crafted in 2021 under the Biden administration with the aim of preventing large global companies from shifting profits to low-tax countries, was amended following negotiations led by the Trump administration.

The agreement, involving nearly 150 countries, sought to establish a minimum 15% tax rate on multinational corporations, regardless of where they operate. This was intended to curb tax avoidance strategies that cost governments billions in lost revenue annually. However, the updated version now excludes major U.S.-based multinational corporations from this minimum tax.

The OECD Secretary-General Mathias Cormann hailed the agreement as a landmark decision in international tax cooperation, emphasizing its potential to enhance tax certainty, reduce complexity, and protect tax bases. U.S. Treasury Secretary Scott Bessent described the deal as a historic victory, asserting that it preserves U.S. sovereignty and shields American workers and businesses from extraterritorial overreach.

The original 2021 agreement was a response to growing concerns about profit shifting by multinational corporations, a practice that allows companies to reduce their tax liabilities by strategically allocating profits to low-tax jurisdictions. This practice has been particularly prevalent in the technology and pharmaceutical sectors, where intellectual property can be easily transferred to subsidiaries in tax havens. The potential impact of the original 15% minimum tax was estimated to generate hundreds of billions of dollars in additional tax revenue for governments worldwide.

The exemption for U.S. multinationals raises questions about the future of international tax cooperation and the effectiveness of the OECD's efforts to combat tax avoidance. While the U.S. government views the revised agreement as a win for American businesses, other countries may see it as undermining the original intent of the global tax deal. The long-term implications of this exemption on global tax revenues and the competitive landscape for multinational corporations remain to be seen.