G7’s Global Minimum Tax Deal Sparks Controversy and Unease

 

At the recent G7 summit in Canada, a controversial agreement was struck that could reshape the global tax landscape—and not necessarily for the better. The leaders of the world’s seven largest advanced economies agreed to a compromise that effectively exempts U.S. multinational corporations from the 15% global minimum tax, a policy originally designed to curb tax avoidance by large companies.

This move, described by some as a “parallel solution,” was largely driven by pressure from the United States, where President Donald Trump had threatened retaliatory measures—dubbed the “revenge tax”—against countries that continued to tax American tech giants. The threat worked. In a bid to avoid a transatlantic trade war, G7 nations, including Italy, France, and Germany, agreed to carve out a special exemption for U.S. firms.

The original goal of the global minimum tax, championed by the OECD and agreed upon by over 130 countries in 2021, was to ensure that large corporations pay at least 15% tax on profits, regardless of where they operate. It was seen as a landmark step toward ending the era of tax havens and profit shifting. But this new G7 deal risks undermining that vision.

Critics argue that the exemption for U.S. companies weakens the very foundation of the agreement. It creates an uneven playing field, where European and Asian multinationals remain subject to the minimum tax while their American counterparts enjoy a loophole. Some fear this could trigger a domino effect, with other countries demanding similar exemptions, thereby unraveling years of painstaking negotiations.

Italian Finance Minister Giancarlo Giorgetti defended the deal as an “honorable compromise,” emphasizing that it shields European exporters from punitive U.S. tariffs. But many observers see it as a short-term fix that sacrifices long-term fairness and global cooperation.

The agreement now heads to the OECD, where it must be ratified by 147 countries. Until then, the future of global tax reform hangs in the balance—caught between diplomacy, economic self-interest, and the enduring challenge of holding powerful corporations accountable.