The development represents a softening of the global stance on the Organisation for Economic Co-operation and Development’s (OECD) landmark 2021 tax deal
The Group of Seven (G7) nations have agreed to a significant exemption for U.S. multinational companies from the global minimum tax outlined in a 2021 international agreement—marking a major policy win for President Donald Trump’s administration.
In a joint statement released Saturday by Canada, which currently holds the G7’s rotating presidency, the group endorsed a “side-by-side” solution. Under this framework, U.S.-parented companies will be taxed solely by the United States on both their domestic and foreign profits, effectively shielding them from additional tax burdens imposed under the international agreement.
The statement explained that the compromise was facilitated by “recently proposed changes to the U.S. international tax system,” part of Trump’s “One, Big, Beautiful Bill” currently under debate in Congress. The side-by-side approach is being positioned as a path to “greater stability and certainty in the international tax system,” particularly amid global tensions around digital taxation and fiscal sovereignty.
The development represents a softening of the global stance on the Organisation for Economic Co-operation and Development’s (OECD) landmark 2021 tax deal. That deal, supported by nearly 140 countries and originally brokered under President Joe Biden’s administration, included two pillars. The second pillar—most controversial to Washington—mandated a minimum 15 percent tax on multinational profits.
Trump has long been a vocal critic of the global tax pact, calling it unfair to U.S. interests. In one of his early executive orders this year, he declared that the U.S. would no longer consider itself bound by the OECD agreement, triggering concern among global partners and a wave of negotiations behind the scenes.
The side-by-side solution offers U.S. companies exemption from the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR)—the core enforcement mechanisms of the global minimum tax. These exemptions are in recognition of existing U.S. tax rules, including the country’s own minimum tax, which the Trump administration argues already meets the intent of the global framework.
U.S. Treasury Secretary Scott Bessent had foreshadowed the agreement on Thursday, suggesting that a “joint understanding among G7 countries that defends American interests” was in development. He also urged Congress to remove Section 899 from the proposed legislation—a controversial clause that would have allowed retaliatory taxes on firms from countries deemed to treat U.S. companies unfairly.
“Following the removal of Section 899 from the Senate version of the One, Big, Beautiful Bill, and considering the success of Qualified Domestic Minimum Top-up Tax implementation, there is a shared understanding that a side-by-side system could preserve important gains made by jurisdictions inside the Inclusive Framework in tackling base erosion and profit shifting,” Bessent said in a statement on X.
The removal of Section 899 has been welcomed by international partners, notably the United Kingdom. British businesses had raised alarms about the clause, fearing it would discourage foreign investment and potentially lead to retaliatory measures by Washington. With the clause dropped, UK officials expressed relief and support for continued cooperation.
The G7’s announcement emphasized that the agreement is not final. The OECD Inclusive Framework, the broader group of over 140 nations involved in shaping global tax rules, must still determine whether to formally adopt the exemption for U.S. firms.
Still, the G7 said it looks forward to “expeditiously reaching a solution that is acceptable and implementable to all,” signaling momentum toward wider international acceptance.
Experts note the decision could have wide-ranging implications for global tax enforcement and multinational compliance. Critics argue it risks undermining the OECD’s goal of creating a level playing field and could open the door for further national carve-outs.
Meanwhile, proponents of the U.S. position argue that the compromise respects national sovereignty and prevents double taxation of U.S. firms, many of which already face complex tax obligations under domestic law.
The U.S. Treasury framed the outcome as a continuation of America’s commitment to global cooperation while prioritizing domestic economic competitiveness.
“The side-by-side system balances fairness and functionality,” the department said. “It ensures our companies remain strong and globally competitive, while maintaining the progress made in curbing tax avoidance and profit shifting.”
As negotiations now move to the OECD forum, diplomats and economists will be closely watching whether the G7 deal marks a shift toward more flexible global tax governance—or signals a broader unraveling of the 2021 pact’s foundational pillars.
