The United States and the Group of Seven countries have agreed to support a proposal that would exempt US companies from some components of an existing global agreement, the G7 says.
The group has created a “side-by-side” system in response to the US administration agreeing to scrap the Section 899 retaliatory tax proposal from President Donald Trump’s tax and spending bill, it said in a statement from Canada, the head of the rolling G7 presidency.
The G7 said the plan recognises existing US minimum tax laws and aims to bring more stability to the international tax system.
United Kingdom businesses are also spared higher taxes after the removal of Section 899 from Trump’s tax and spending bill.
The UK government said businesses would benefit from greater certainty and stability following the agreement.
Some UK businesses had in recent weeks said they were worried about paying substantial additional tax due to the inclusion of Section 899, which has now been removed.
“Today’s agreement provides much-needed certainty and stability for those businesses after they had raised their concerns,” finance minister Rachel Reeves said in a statement, adding that more work was need to tackle aggressive tax planning and avoidance.
G7 officials said that they look forward to discussing a solution that is “acceptable and implementable to all”.
In January, through an executive order, Trump declared that the global corporate minimum tax deal was not applicable in the US, effectively pulling out of the landmark 2021 arrangement negotiated by the administration of his predecessor Joe Biden with nearly 140 countries.
He had also vowed to impose a retaliatory tax against countries that impose taxes on US firms under the 2021 global tax agreement.
This tax was considered detrimental to many foreign companies operating in the US.
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