United States Will Be Exempt From OECD 15 Percent Global Corporate Minimum Tax

In a move the National Association of Manufacturers (NAM) called “a massive triumph for manufacturing” in the United States, on June 26, the U.S. Department of the Treasury announced a deal with G-7 allies to exempt U.S.  companies from certain taxes imposed by other nations.

As Connecting the Dots has reported in the past, Pillar Two of the Organization for Economic Cooperation and Development (OECD) had introduced a 15 percent global corporate minimum tax rate that allows other countries to collect the tax if companies’ home nations do not. Under the terms of the deal announced Thursday, Pillar Two taxes will not apply to U.S. companies.

The agreement also paved the way for an agreement by U.S. lawmakers not to seek retaliatory taxes. That proposal would have allowed the U.S. to impose retaliatory taxes on companies from countries with punitive tax policies, including the ones in the OECD regime.

According to NAM, the agreement means “manufacturers of all sizes will be relieved of the threat of damaging tax burdens [and] domestic businesses will no longer face the threat of Pillar Two and foreign-headquartered companies will not be impacted by Section 899.”