The Group of Seven (G7) announced a landmark "side-by-side" tax agreement on June 28, 2025, exempting U.S. companies from core components of the 2021 global minimum tax deal. In exchange, the U.S. will scrap the controversial Section 899 retaliatory tax from President Donald Trump’s "One Big Beautiful Bill Act." The deal recognizes existing U.S. minimum tax laws and aims to stabilize international tax systems by shielding American firms from foreign "top-up" taxes under the OECD’s 15% global minimum tax framework.
The breakthrough followed weeks of pressure from the Trump administration, which had threatened to impose steep penalties on foreign companies operating in the U.S. via Section. This "revenge tax" would have targeted firms from countries deemed to enforce "discriminatory" taxes against U.S. businesses, particularly those with digital services taxes affecting giants like Amazon and Meta. Facing potential losses of $55 billion annually and 360,000 U.S. jobs, global business groups lobbied fiercely against the provision, prompting Treasury Secretary Scott Bessent to negotiate its removal.
Under the new framework:
U.S. parented groups gain full exemption from the OECD’s Undertaxed Profits Rule (UTPR) and Income Inclusion Rule (IIR).
G7 nations commit to addressing future tax base erosion risks jointly.
The deal enables "material simplifications" to tax compliance processes while preserving other nations’ rights to implement domestic top-up taxes.
The agreement avoids a transatlantic tax war but leaves digital services taxes, which is a key irritant for U.S. tech firms only "partially addressed".
January’s executive order had unilaterally declared the global tax deal "null" in the U.S., with Trump calling it a threat to American "sovereignty." The move isolated Washington, with 140 countries implementing the 15% minimum tax. Critics warned it could trigger retaliatory tariffs and undermine tax justice efforts. However, the G7’s compromise allows the U.S. to reengage globally while avoiding enforcement against its companies which is a victory framed by Republicans as "reclaiming tens of billions ceded by Democrats".