On January 23, 2025, newly inaugurated US President Donald Trump signed an executive order dismantling the previously supported global corporate minimum tax agreement. This international initiative, backed by the Organization for Economic Cooperation and Development (OECD) and nearly 150 countries, aimed to impose a 15% minimum tax on large multinational corporations' profits.
Trump's order states that the global tax deal has no effect in the United States without Congressional action, marking a significant shift in US tax policy. The executive order emphasizes the need to protect US sovereignty and economic competitiveness in response to foreign tax practices.
The agreement's failure could hinder efforts to tax profits where they are earned, particularly affecting major US companies such as Amazon, Apple, Google, and Facebook. As a result, the success of the agreement is now uncertain, with some experts warning that the political climate in Washington may jeopardize international tax cooperation.
Several countries have already implemented OECD-backed rules, while others are reconsidering their participation in the agreement. The US has not ratified the deal, and with Trump's recent actions, businesses based in the country will not see immediate changes regarding global taxation.
Republican opposition to the agreement has evolved, with some party members now advocating for taxing these companies domestically, despite earlier arguments against foreign taxation. This shift raises concerns about potential tariffs that could increase prices for American consumers and contribute to inflation.
Trump's executive order also mandates a 60-day investigation into foreign countries' compliance with US tax treaties, indicating a proactive stance against unilateral tax measures that could disproportionately impact American companies. Meanwhile, countries like France, Italy, Spain, the UK, India, and New Zealand have already implemented digital service taxes, further complicating the global tax landscape.
The lack of a cohesive international tax strategy may lead to increased competition among nations, each seeking to establish unilateral tax regulations, potentially resulting in further economic instability.