US and G-7 nations agree on tax deal creating a “side-by-side” system exempting US companies from parts of global framework.

US and G-7 nations agree on tax deal creating a “side-by-side” system exempting US companies from parts of global framework.

The US and fellow Group of Seven (G-7) nations have reached a significant agreement aimed at avoiding a global tax war. The deal involves creating a "side-by-side" system that exempts US companies from certain elements of an existing global agreement [1]. This agreement comes amidst ongoing negotiations with the Group of 20 (G-20) and the Organization for Economic Cooperation and Development (OECD) regarding corporate taxes.

As part of the agreement, the US officials have agreed to remove Section 899 from President Donald Trump’s tax-cut bill. Known as the "revenge tax," this provision would have increased taxes on the US income of non-US-based businesses and individuals [1]. The removal of this section was crucial to securing the agreement among the G-7 nations.

The side-by-side system aims to provide greater stability and certainty in the international tax system moving forward [1]. It will include a constructive dialogue on the taxation of the digital economy and on preserving the tax sovereignty of all countries. However, the issue of "digital services taxes," which some countries levy on the profits of US-based technology companies, remains partially addressed.

US Treasury Secretary Scott Bessent has asked Senate and House leadership to remove Section 899 from the so-called One Big Beautiful Bill Act after securing G-7 backing for the side-by-side system [1]. The removal of the revenge tax was key to securing the agreement among the G-7 nations.

In a separate development, President Luiz Inacio Lula da Silva's administration will appeal to Brazil’s Supreme Court to try to preserve a tax decree that Congress overturned this week [2]. This move comes as the Brazilian government seeks to maintain a decree that was recently repealed by Congress.

References:
[1] https://www.bloomberg.com/news/articles/2025-06-28/g-7-countries-agree-to-side-by-side-tax-deal-for-us-companies
[2] https://news.bloomberglaw.com/daily-tax-report/lula-to-go-to-top-court-to-challenge-overturn-of-tax-decree-1