US-based multinational companies will be exempt from OECD global tax deal

US multinational corporations will be exempted from paying more corporate taxes overseas in a deal finalised by the Organisation for Economic Cooperation and Development.

The OECD announced Monday, US time, that nearly 150 countries have agreed on the plan, initially crafted in 2021, to stop large global companies from shifting profits to low-tax countries, no matter where they operate in the world. Australia is among the 150 countries.

The amended version excludes large US-based multinational corporations from the 15 per cent global minimum tax after negotiations between President Donald Trump’s administration and other members of the Group of Seven wealthy nations.

OECD Secretary-General Mathias Cormann said in a statement that the agreement was a “landmark decision in international tax co-operation” and “enhances tax certainty, reduces complexity, and protects tax bases”

US Treasury Secretary Scott Bessent called the agreement “a historic victory in preserving US sovereignty and protecting American workers and businesses from extraterritorial overreach”.

The most recent version of the deal waters down a landmark 2021 agreement that set a minimum global corporate tax of 15 per cent. The idea was to stop multinational corporations, including Apple and Nike, from using accounting and legal manoeuvres to shift earnings to low- or no-tax havens.

Those havens are typically places like Bermuda and the Cayman Islands, where the companies actually do little or no business.

Former Treasury Secretary Janet Yellen was a key driver of the 2021 OECD global tax deal and made the corporate minimum tax one of her top priorities. The plan was widely panned by congressional Republicans who said it would make the U.S. less competitive in a global economy.

The Trump administration in June re-negotiated the deal when congressional Republicans rolled back a so-called revenge tax provision from Trump’s big tax and spending bill that would have allowed the federal government to impose taxes on companies with foreign owners, as well as on investors from countries judged as charging “unfair foreign taxes” on US companies.

Tax transparency groups have criticised the amended OECD plan.

“This deal risks nearly a decade of global progress on corporate taxation only to allow the largest, most profitable American companies to keep parking profits in tax havens,” Zorka Milin, policy director at the FACT Coalition, a tax transparency nonprofit, said.

Tax watchdogs argue the minimum tax is supposed to halt an international race to the bottom for corporate taxation that has led multinational businesses to book their profits in countries with low tax rates.