US Agrees with 150 Countries Not to Apply OECD Global Minimum Tax to US Companies

Preservation of Tax Incentives Such as R&D Tax Credits
Major U.S. Tech Firms Like Google and Apple Avoid Additional Tax Burden

On January 5 (local time), the U.S. Department of the Treasury announced that it had reached an agreement with more than 145 countries not to apply the Organisation for Economic Co-operation and Development (OECD)'s global minimum tax rate of 15% to U.S. companies, as part of efforts to prevent multinational corporations from avoiding taxes.

Yonhap News Agency

In a statement issued under the name of Treasury Secretary Scott Bessent, the department said, "The Treasury has reached an agreement with more than 145 countries participating in the inclusive implementation framework led by the OECD and the Group of Twenty (G20), so that U.S.-headquartered companies will be subject only to the U.S. global minimum tax and will be exempt from the minimum tax under 'Pillar Two' of the OECD."

This agreement is a mutual recognition that tax sovereignty over the global operations of U.S. companies belongs to the United States, while tax sovereignty over business activities within each country's territory belongs to that country.

In particular, it ensures the full protection of various tax incentives approved by Congress, such as research and development (R&D) tax credits aimed at promoting investment and job creation in the United States.

As a result, even if U.S. companies have an effective tax rate below the OECD standard of 15% due to tax credits and other incentives, they will not be required to pay additional taxes to other countries.

The OECD global minimum tax was originally designed to allow countries to impose additional taxes on multinational corporations with global revenues exceeding 750 million euros if they pay less than 15% tax in their home country.

This measure was introduced to prevent companies from engaging in tax avoidance by seeking out low-tax jurisdictions. Major U.S. technology firms such as Google, Amazon, and Apple, which generate revenue in multiple countries but have historically paid taxes only in countries where their servers are located, were expected to be the primary targets.

However, the U.S. Republican Party and President Donald Trump have strongly opposed this, calling it an "infringement of tax sovereignty and discrimination against U.S. companies."

On his first day in office last year, President Trump issued an executive order declaring that the OECD tax agreement would have no effect in the United States, emphasizing the restoration of sovereignty.

This agreement was reached after additional negotiations with more than 100 countries, following the initial consensus among the Group of Seven (G7) nations in June of last year.

The U.S. Treasury added, "We will continue to consult with foreign governments to ensure the full implementation of the agreement, enhance the stability of the international tax environment, and move toward constructive dialogue on the taxation of the digital economy."