G7 Strikes Controversial Global Tax Deal: U.S. Wins Big Tech Exemption

 

In a landmark yet contentious move, the Group of Seven (G7) nations have finalized a revised agreement on the Global Minimum Tax, a policy originally designed to curb tax avoidance by multinational corporations.

 The new deal, however, includes a significant carve-out: U.S.-based companies—particularly Big Tech giants—will be exempt from key provisions of the tax framework.

The agreement, reached under Canada’s G7 presidency, introduces what officials are calling a “parallel solution.” 

This mechanism acknowledges the existing U.S. tax regime and exempts American multinationals from the stricter rules on income inclusion and undertaxed profits that other countries must follow. 

The rationale? These companies already pay taxes in the U.S., and the exemption is seen as a way to respect national fiscal sovereignty.

This shift marks a dramatic departure from the original 2021 OECD-brokered pact, which aimed to establish a 15% minimum tax rate globally and prevent profit shifting to low-tax jurisdictions. 

That deal was hailed as a breakthrough in international tax cooperation. But with the U.S. never having ratified the agreement, and with President Donald Trump’s administration threatening retaliatory “revenge taxes” on countries enforcing the rules, the G7 compromise appears to be a strategic retreat.

Supporters of the new deal, including Italian Finance Minister Giancarlo Giorgetti, have called it an “honorable compromise” that protects domestic businesses from American sanctions. 

The OECD, while acknowledging the deviation from the original framework, described the agreement as a “milestone” that could still foster global tax stability.

Critics, however, argue that the exemption undermines the very purpose of the Global Minimum Tax. By allowing the world’s largest and most profitable companies—many of them American tech firms—to sidestep the rules, the deal risks perpetuating the very tax avoidance it sought to eliminate. 

Estimates suggest U.S. companies could save up to $100 billion in foreign taxes under the new arrangement.

The deal is not yet binding and must be ratified by the broader OECD Inclusive Framework, which includes over 140 countries.

 Still, the G7’s endorsement sends a powerful signal and may shape the future of global tax policy for years to come.