G7 Nations Agree to Exempt U.S. Firms from Global Minimum Tax

The Group of Seven (G7) countries, in a significant policy alteration, will exempt U.S. multinational companies from the global minimum tax in their agreement, providing a specific “side-by-side” taxation treatment for these companies. Earlier in the day, the G7 specified these companies will be taxed solely in the United States on the profits they accrue both domestically and abroad. U.S. Treasury Secretary has called this a game “changing” piece of a potentially new framework of global taxation that may completely transform the OECD negotiated framework that was established in 2021.

The G7 issued a communique on June 28, 2025, while Canada presided over the meeting which stated U.S. multinational companies will be exempt from the 15% global minimum tax. This comes after Trump turned to domestic policy changes and various diplomatic challenges to alter international taxation law. In line with the overall changes to the U.S. tax code, this is a significant separation from the agreement governing information that participants had entered into as part of the OECD’s landmark 2021 agreement to consider globalization in taxation.

Background and Context

• In 2021, under OECD auspices about 140 countries came to a two-pillar global tax deal.

• Pillar One: The agreement turns over taxation rights on large multinationals.

• Pillar Two: Introduces a 15% Global Minimum Tax to eliminate a competitive tax advantage or base erosion through tax competition models.

• The U.S. has expressed concern within this agreement since its announcement, this was especially evident while domestic policy was developed during Trump’s presidency who cited reason to repeal to sovereignty and domestic business competitive issues.

What the G7 Agreement Provides

• U.S. corporations will be taxed only in the United States — they will not be taxed in the various jurisdictions where they operate.

• This is called a “side-by-side” model.

The arrangement offers,

• Tax stability and reduced compliance complexity.
• Increased foreign investment appeal for U.S. businesses.
• Strategic shielding from double taxation.

The US Treasury Department has indicated that removing Section 899 from the entire bill negotiated in the Senate creates a common understanding that the side-by-side approach may help preserve the progress achieved by jurisdictions in the Inclusive Framework to address base erosion and profit shifting.

“Following the removal of section 899 from the Senate version of the One, Big, Beautiful Bill, and consideration of the success of Qualified Domestic Minimum Top-up Tax implementation and its impact – there is a shared understanding that a side-by-side system could preserve important gains made by jurisdictions inside the Inclusive Framework in tackling base erosion and profit shifting and provide greater stability and certainty in the international tax system moving forward, the G7 announced. We look forward to discussing and developing this understanding within the Inclusive Framework,” the Treasury said in a post on X.