The U.S. Treasury Department has secured a landmark agreement exempting American-headquartered multinational corporations from the OECD's 15% global minimum tax, marking a dramatic reversal of Biden administration policy and reshaping the international tax landscape.

Treasury Secretary Scott Bessent announced the agreement, calling it "a historic victory in preserving U.S. sovereignty and protecting American workers and businesses from extraterritorial overreach."

The Policy Reversal

The global minimum tax, known as Pillar Two, was a signature achievement of former Treasury Secretary Janet Yellen, who worked with over 140 countries through the OECD and G20 to establish a floor on corporate taxation worldwide. The goal was to end the "race to the bottom" on corporate taxes and prevent multinational companies from shifting profits to low-tax jurisdictions.

President Trump's Day One Executive Orders made clear that the Biden administration's proposed OECD Pillar Two deal would have no force or effect for the United States. The Treasury Department then worked with the more than 145 countries in the OECD/G20 Inclusive Framework to secure the exemption for U.S. companies.

"This side-by-side agreement recognizes the tax sovereignty of the United States over the worldwide operations of U.S. companies and the tax sovereignty of other countries over business activity within their own borders."

— U.S. Treasury Department statement

What the Exemption Means

The carve-out means U.S.-headquartered companies will not be subjected to Pillar Two's income inclusion rule and its undertaxed profits rule. In practical terms, this means:

  • American multinationals will remain subject only to U.S. global minimum taxes
  • Foreign countries cannot impose "top-up" taxes on the foreign profits of U.S. companies
  • U.S. companies won't face the compliance burden of the complex Pillar Two calculations
  • The global deal remains in effect for companies headquartered in the other 145+ participating countries

Congressional Reaction

The agreement drew sharp partisan reactions on Capitol Hill. Congressional Republicans applauded the finalized deal as a victory for American competitiveness.

Senate Finance Committee Chair Mike Crapo and House Ways and Means Committee Chair Jason Smith issued a joint statement: "Today marks another significant milestone in putting America First and unwinding the Biden Administration's unilateral global tax surrender."

Democrats, however, criticized the move as a giveaway to large corporations that will allow profit shifting to continue. They argue the exemption undermines years of international cooperation on tax policy and will ultimately cost the U.S. Treasury revenue as companies exploit the difference between U.S. and global rules.

Business Implications

For U.S. multinationals, the exemption removes what many saw as a significant compliance burden and potential tax increase. Companies like Apple, Google, Microsoft, and other tech giants with substantial foreign operations had been preparing for Pillar Two implementation and can now stand down those efforts.

However, the situation creates complexity for multinational companies with operations in both the U.S. and countries that are implementing Pillar Two. These companies may still face the global minimum tax on their non-U.S. operations while enjoying the exemption for their American parent companies.

The International Response

The OECD's announcement that nearly 150 countries have agreed to the amended plan, with the U.S. exemption, suggests that other nations have accepted the carve-out to preserve the broader deal. The alternative — the complete collapse of the Pillar Two framework — was apparently seen as worse than proceeding without full U.S. participation.

Some tax experts note that this creates an unusual two-tier system where U.S. companies operate under different rules than their foreign competitors. Whether this gives American firms a competitive advantage or simply delays an inevitable reckoning on global tax coordination remains to be seen.

What Comes Next

The exemption doesn't end the global tax debate. Congress still needs to address how U.S. tax law interacts with the modified international framework, and future administrations could potentially reverse course again.

For now, the agreement represents a significant shift in U.S. international tax policy and a clear signal that the Trump administration prioritizes national sovereignty over multilateral coordination on corporate taxation. Whether this approach benefits American workers and businesses, as the administration claims, or simply allows continued profit shifting, will be debated for years to come.