Under Biden, America Got 150 Countries to Agree on 15% Global Corporate Tax. Under Trump, America Secures Exemption

On January 5, 2026, the U.S. Treasury Department announced an agreement with more than 145 countries in the OECD/G20 Inclusive Framework to exempt U.S.-based multinational corporations from the 15% global minimum tax under the OECD Pillar Two framework. According to the Treasury release, the arrangement allows U.S. companies to remain subject only to U.S. global minimum taxes.

The agreement was reached after negotiations between the Trump administration and G7 members, which saw the U.S. secure key concessions on tax sovereignty and regulatory alignment. The revised framework is referred to as a 'side-by-side agreement,' recognizing the tax policies of the U.S. and aligning them with the global minimum tax framework.

The deal addresses long-standing concerns from U.S. lawmakers and business groups, who argued that the original 2021 OECD tax plan would harm U.S. competitiveness and infringe on national tax sovereignty. By securing this exemption, the Trump administration and U.S. Congress fulfilled their commitment to 'America First' tax policy.

The Trump administration opposed the Biden-era OECD global minimum tax plan, which was negotiated in 2021 and aimed to prevent large multinational corporations from shifting profits to low-tax jurisdictions. The U.S. had threatened to implement retaliatory 'revenge tax' provisions against countries deemed to impose discriminatory taxes on American firms if the deal proceeded without U.S. concessions.

To prevent a breakdown in international tax cooperation, the U.S. and its G7 counterparts reached a June 2025 agreement. In exchange for dropping the retaliatory tax provision, U.S. companies received a carve-out from key elements of the global tax plan, including the income inclusion and undertaxed profits rules.

What Are Analysts Watching Next?

The new agreement includes simplified compliance measures and safe harbors to reduce the administrative burden on U.S. companies operating globally. These changes align with the Trump administration's goal of reducing complexity and ensuring U.S. businesses are not unfairly disadvantaged compared to international peers.

Treasury Secretary Scott Bessent emphasized that the deal protects the U.S. R&D tax credit and other incentives for innovation and job creation according to Treasury officials. U.S. business groups have welcomed the outcome, with the Global Business Alliance calling it a 'commitment to America's economic strength' according to business leaders.

However, tax transparency advocates have criticized the agreement, arguing that it undermines global efforts to address corporate tax avoidance. Zorka Milin of the FACT Coalition called the deal a 'regrettable setback for the global fight against corporate tax avoidance'.

How Will This Affect the U.S. Economy and Businesses?

The exemption means U.S. companies will not face additional taxes in foreign jurisdictions under the new OECD rules. This is expected to provide tax certainty and stability for U.S. multinationals, which include major firms in technology, finance, and consumer goods.

The agreement also eliminates the need for the U.S. to impose retaliatory taxes, a move that had raised concerns among investors and business leaders about its potential to discourage foreign investment.

While the deal preserves U.S. tax sovereignty, it has weakened the original 15% global minimum tax framework. The revised arrangement allows American corporations to continue structuring profits in low-tax jurisdictions like Bermuda and the Cayman Islands without additional foreign tax implications.

What's Next for the Global Tax Agreement?

The OECD has estimated that the original tax plan would have generated $220 billion in additional global tax revenue. The new side-by-side system may reduce that total, but it ensures broader compliance and avoids potential conflicts over extraterritorial tax rules.

The U.S. Treasury plans to continue working with other countries to ensure the agreement's full implementation and to address remaining issues related to the taxation of the digital economy according to Treasury officials.

The revised framework is expected to stabilize the global tax landscape after months of uncertainty. With 147 countries now on board, the updated agreement aims to balance tax sovereignty, fairness, and international cooperation according to OECD officials.