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 on overseas profits. The deal, initially crafted in 2021 under the Biden administration with the aim of preventing large global companies from shifting profits to low-tax jurisdictions, was amended following negotiations led by the Trump administration.

The agreement, involving nearly 150 countries, sought to establish a minimum 15% tax rate for 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 excludes U.S.-based multinationals, a significant alteration to the original framework.

OECD Secretary-General Mathias Cormann hailed the agreement as a "landmark decision" that enhances tax certainty, reduces complexity, and protects tax bases. U.S. Treasury Secretary Scott Bessent described it as a "historic victory" for U.S. sovereignty, protecting American workers and businesses from extraterritorial overreach.

The initial 2021 agreement was a response to growing international concern over corporate tax avoidance. Multinational corporations, particularly in the tech and pharmaceutical sectors, have been known to exploit loopholes and transfer profits to low-tax countries like Ireland, Switzerland, and the Netherlands, significantly reducing their overall tax burden. The proposed 15% minimum tax was designed to level the playing field and ensure that these companies pay a fairer share of taxes.

The exemption for U.S. multinationals could have significant implications for global tax competition. While the U.S. government argues that it protects American businesses, other countries may view it as an unfair advantage. It remains to be seen how this revised agreement will impact the overall effectiveness of the global tax reform effort and whether other nations will seek similar exemptions, potentially undermining the original goals of the initiative. The future of international tax cooperation hinges on how these competing interests are balanced in the coming years.