The United States and the Group of Seven nations have reached an agreement to back a proposal that would exempt U.S. companies from certain elements of an existing global tax framework, according to a statement released by the G7 on Saturday.
In response to the U.S. administration’s decision to withdraw the Section 899 retaliatory tax proposal from former President Donald Trump’s tax and spending bill, the group has established a "side-by-side" system, according to a statement issued by Canada, which currently holds the rotating G7 presidency.
The G7 stated that the plan acknowledges current U.S. minimum tax regulations and seeks to enhance stability within the global tax system.
The U.S. Treasury Department stated that, with Section 899 removed from the Senate version of the tax and spending bill, there is now a shared understanding that a side-by-side system could help preserve key progress made by jurisdictions within the Inclusive Framework in addressing base erosion and profit shifting.
“We look forward to discussing and developing this understanding within the Inclusive Framework,” the Department said in a post on X on Saturday.
UK businesses are also shielded from higher taxes following the removal of Section 899 from former President Donald Trump’s tax and spending bill.
The UK government stated that the agreement would provide businesses with greater certainty and stability. In recent weeks, some British companies had expressed concerns about facing significant additional tax liabilities due to the inclusion of Section 899, which has since been removed.
Finance Minister Rachel Reeves stated that “Today’s agreement provides much-needed certainty and stability for those businesses after they had raised their concerns,” while also emphasizing that further efforts are necessary to address aggressive tax planning and avoidance.
G7 officials said that they look forward to discussing a solution that is “acceptable and implementable to all.”
In January, former President Trump issued an executive order declaring that the global minimum corporate tax agreement would not apply in the United States, effectively withdrawing from the landmark 2021 deal negotiated by the Biden administration and nearly 140 other countries.
He also pledged to implement a retaliatory tax on countries that levy taxes on U.S. companies under the 2021 global tax agreement. This measure was viewed as harmful to numerous foreign businesses operating within the United States.
