G7 agreement on global minimum tax with exemptions for the US
Under the Canadian presidency, the G7 finds a way to 'bail out' large American multinationals. Giorgetti: 'Honourable compromise that protects our companies from automatic American retaliation'
2' min read
2' min read
Agreement at the G7 on the global taxation of multinationals, with a conspicuous exemption for US companies representing a new victory for President Donald Trump. The Canadian G7 presidency, in a note, explains that agreement was reached on a 'parallel solution' that, on account of the 'fiscal sovereignty of countries', exempts US companies from some parts of the new tax regime, due to the taxes they already pay in the US. The turnaround threatens to upset the 'global minimum tax' on which a historic agreement was reached in 2021 that aimed to put an end to tax avoidance practices by multinationals: in particular US Big Tech.
The Canadian Ministry of Finance announcement
.The agreement was announced by the Canadian Ministry of Finance. Following discussions on the issue, 'a shared view emerged that a parallel system could preserve the important achievements of jurisdictions under the Inclusive Framework in combating base erosion and profit shifting, and provide greater stability and certainty to the international tax system in the future,' the note states. The Ministry of Finance explains that 'the implementation of a parallel system will facilitate further progress towards stabilising the international tax system, including a constructive dialogue on the taxation of the digital economy and safeguarding the tax sovereignty of all countries'.
It is possible, if not probable, that the solution found at the G7 level - all the more so under the chairmanship of Canada - could affect the aligned negotiationsof the various groups of countries with the United States on tariffs.
Giorgetti: honourable compromise
On the solution, Italian Finance Minister Giancarlo Giorgetti emphasised that 'the agreement formalised at the G7 on the global minimum tax is an honourable compromise found with the US administration that protects our companies from the automatic retaliation originally foreseen in clause 899 of the Obbba (One big beautiful bill act) under consideration by the US Senate, the tax bill wanted by Donald Trump that envisages the extension of tax cuts and selective reductions in public spending worth a total of around USD 2.7 trillion
