Trump Administration Rejects OECD’s Global Minimum Tax Deal

The Organisation for Economic Co-operation and Development (OECD) has pledged to maintain collaboration with the United States, despite President Donald Trump’s administration effectively withdrawing the nation from the OECD’s global minimum tax framework.

On January 20, the Trump administration released a memorandum asserting that the OECD’s 15% global minimum corporate tax, known as pillar two, “has no force or effect” in the U.S. The document, addressed to key officials including the U.S. Secretary of the Treasury and the Permanent Representative to the OECD, criticized the deal for imposing extraterritorial jurisdiction over U.S. income and restricting the country’s ability to implement tax policies favoring American businesses and workers.

The memo stated, “Because of the global tax deal and other discriminatory foreign tax practices, American companies may face retaliatory international tax regimes if the U.S. does not comply with foreign tax policy objectives. This memorandum recaptures our nation’s sovereignty and economic competitiveness by clarifying that the global tax deal has no force or effect in the U.S.”

It also declared that commitments made under the previous administration regarding the OECD tax framework would only take effect if Congress adopted the provisions.

OECD Secretary General Matthias Cormann responded on January 21, affirming the organization’s intent to continue working with the U.S. Cormann remarked, “There have been concerns raised with us by U.S. representatives about various aspects of our international tax agreement... Multinationals operating across borders will continue to interact with the tax systems of multiple sovereign jurisdictions. We will keep working with the U.S. and all countries at the table to support international cooperation that promotes certainty, avoids double taxation, and protects tax bases.”

The memo also instructed the Secretary of the Treasury to investigate foreign countries potentially violating tax treaties with the U.S. or implementing extraterritorial tax rules that disproportionately harm American businesses. It directed the Secretary to propose protective measures or other actions to counter such practices and to deliver these recommendations to the president within 60 days.

The administration’s rejection of pillar two follows President Trump’s January 14 statement on his Truth Social platform, where he announced plans for an External Revenue Service to impose tariffs on imports, ensuring trade partners “pay their fair share.” Trump has previously suggested tariffs of up to 60% on imports from countries like China. Although his inauguration orders did not include any formal tariff announcements, Reuters reported that Trump is considering 25% duties on goods from Canada and Mexico.

By fLEXI tEAM