Washington: In a significant development with global economic implications, the Group of Seven (G7) nations have reached a breakthrough agreement that will protect American and British multinational corporations from being subjected to additional global taxes under the OECD’s proposed 15% minimum corporate tax framework. The deal, reported by the Financial Times and later confirmed through diplomatic sources, introduces a “side-by-side” arrangement designed to recognize equivalent domestic tax contributions made by firms in their home countries.
The agreement comes amid growing international efforts to implement a fair and consistent tax regime for global companies, aiming to curb aggressive profit-shifting and tax avoidance by large multinationals. However, the new G7 consensus now provides a pathway for U.S. and U.K.-based firms to be exempted from paying supplementary taxes in foreign jurisdictions, provided they have already paid comparable tax rates at home. This move, according to negotiators, maintains the spirit of global tax fairness while preserving national sovereignty over fiscal policy.
A major catalyst for the deal was the recent decision by the U.S. Senate to drop Section 899—a provision in earlier tax legislation that would have imposed retaliatory taxes on foreign governments targeting American companies. With this political hurdle cleared, U.S. Treasury Secretary Scott Bessent called on lawmakers to permanently eliminate the clause, paving the way for constructive international tax cooperation.
Supporters of the agreement argue that it will deliver much-needed clarity and stability for multinational corporations operating across jurisdictions. U.K. Finance Minister Rachel Reeves welcomed the outcome, saying it “ensures tax consistency for businesses while supporting the wider goals of the global minimum tax initiative.” She added that the side-by-side approach enables companies to comply with their tax responsibilities without facing overlapping or punitive levies from other countries.
However, critics have voiced concerns that the exemptions granted to powerful economies could undermine the broader objective of the OECD’s Pillar Two rules, which are designed to establish a floor for global corporate taxation and prevent base erosion. Nobel Prize-winning economist Joseph Stiglitz was among those who criticized the agreement, warning that it prioritizes corporate interests over equity and fairness for citizens and smaller nations. “This move chips away at the foundation of a truly global tax system,” he remarked.
The agreement is currently limited to the G7 bloc and is not yet legally binding across the 147 countries participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). It will require broader consensus to be implemented universally. Yet, the deal signals a shift in the global tax landscape, particularly in how leading economies intend to enforce or adapt the 15% global minimum tax first agreed upon in principle in 2021.
As countries continue to navigate the balance between sovereignty and global cooperation, the G7's latest deal marks both a compromise and a challenge an effort to sustain international tax unity while protecting domestic economic interests. Whether this “side-by-side” approach becomes the standard or a stepping stone remains to be seen in the months ahead.