Under Biden, America got 150 countries to agree a 15% global corporate tax. Under Trump, America gets an exemption

The OECD announced Monday that nearly 150 countries have agreed to the plan, initially drafted in 2021, to prevent major global companies from shifting their profits to low-tax countries, regardless of where they operate in the world.

The revised version excludes large multinational companies based in the United States from the 15% global minimum tax after negotiations between the administration of President Donald Trump and other members of the Group of Seven rich countries.

The Secretary-General of the Organization for Economic Cooperation and Development, Matthias Cormann, said in a statement that the agreement is “a landmark decision in international tax cooperation” and “enhances tax certainty, reduces complexity, and protects tax rules.”

US Treasury Secretary Scott Besent described the agreement as “a historic victory in preserving US sovereignty and protecting American workers and companies from expanding beyond territorial borders.”

The latest version of the deal is a landmark 2021 agreement that sets a minimum global corporate tax of 15%. The idea was to prevent multinational corporations, including Apple and Nike, from using accounting and legal maneuvers to shift profits to low- or no-tax havens.

These havens are usually in places like Bermuda and the Cayman Islands, where companies actually do little or no business.

Former Treasury Secretary Janet Yellen was a key driver of the 2021 OECD Global Tax Agreement and made minimum corporate taxes one of her top priorities. The plan was widely criticized by Republicans in congress who said it would make the United States less competitive in the global economy.

The Trump administration in June renegotiated the deal when Republicans in Congress backed away from the so-called retaliation tax provision of Trump’s massive tax and spending bill, which would have allowed the federal government to tax foreign-owned companies, as well as investors from countries seen as imposing “unfair foreign taxes” on U.S. companies.

Tax transparency groups have criticized the revised OECD plan.

“This deal risks nearly a decade of global progress on corporate taxation just to allow the largest and most profitable U.S. companies to keep their profits in tax havens,” said Zorka Melin, policy director at the FACT Alliance, a tax transparency nonprofit.

Tax watchdogs say the minimum tax is supposed to stop the international race to the bottom in corporate taxation, which has led multinational companies to book their profits in countries with low tax rates.

Republicans in Congress praised the final agreement. “Today marks another milestone in putting America first and dismantling the Biden administration’s unilateral global tax capitulation,” Senate Finance Committee Chairman Mike Crapo, R-Idaho, and House Ways and Means Committee Chairman Jason Smith, R-Mo., said in a joint statement.