The United States and the Group of Seven (G7) nations have reached a significant agreement to support a proposal that would exempt U.S. multinational companies from certain components of an existing global tax agreement, the G7 announced in a statement issued on Saturday.

The breakthrough comes as the G7 works to implement a “side-by-side” solution designed to address concerns raised by the U.S. regarding the 2021 global minimum tax deal. Under the new understanding, U.S. companies would primarily be taxed at home on both their domestic and foreign profits, avoiding additional layers of taxation in other countries.

The agreement follows the U.S. administration’s decision to withdraw the controversial Section 899 retaliatory tax proposal, dubbed the “revenge tax,” from President Donald Trump’s “One, Big, Beautiful Bill.” This retaliatory measure had aimed to impose higher taxes on foreign-owned firms and investors from countries that adopted policies deemed unfair to U.S. businesses.

The G7 stated that this new framework acknowledges existing U.S. minimum tax laws and aims to provide greater stability and certainty in the international tax system. Officials expressed optimism that this “acceptable and implementable” solution will facilitate further progress within the broader international tax reform efforts, which involve nearly 140 countries under the auspices of the Organisation for Economic Co-operation and Development (OECD).

The 2021 global tax agreement, a landmark deal negotiated under the previous administration, included two pillars, with the second pillar setting a minimum global corporate tax rate of 15 percent. President Trump had previously declared that the U.S. would not apply this deal, pushing for protections for American companies. The G7’s current agreement represents a significant concession to U.S. demands, aimed at ensuring the participation and cooperation of the world’s largest economy in the global tax framework.

By: TPA News Desk | editor@thepointafricanews.com