The G-7 nations have agreed to exempt US multinational companies from the global minimum tax, a move that aligns with the interests of President Trump’s government. This “side-by-side” solution allows US companies to be taxed only at home, on both domestic and foreign profits. The agreement was facilitated by proposed changes to the US international tax system, as part of Trump’s domestic policy bill. Ultimately, the OECD will determine the final exemption.
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President Trump issued an executive order withdrawing the US from the OECD’s global minimum corporate tax agreement, threatening Ireland’s significant corporate tax revenue. This action targets countries imposing “extraterritorial” levies on US multinationals, potentially impacting Ireland’s reliance on taxes from US companies headquartered there. The Irish Department of Finance is reviewing the order, while the IDA Ireland emphasizes that taxation is only one factor attracting foreign direct investment. The EU expressed regret over the decision and stated its commitment to the tax reforms, though uncertainty remains regarding potential retaliatory measures and escalating trade disputes.
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John Q. Hosedrinker