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In a dramatic turn at the June 2025 G7 summit, leaders of the world’s richest democracies reached a controversial agreement to exempt U.S. multinational corporations from key provisions of the global minimum tax. The move, widely seen as a concession to President Donald Trump, has sparked fierce debate over the future of international tax cooperation.
Originally approved in 2021 and implemented in 2024, the global minimum tax was designed to curb tax avoidance by large corporations. It set a 15% minimum tax rate on profits earned in any jurisdiction, aiming to prevent companies from shifting earnings to low-tax havens. But under pressure from the U.S., the G7 has now adopted a “parallel solution” that allows American firms to bypass certain rules—on the grounds that they already pay sufficient taxes domestically.
The catalyst? Trump’s proposed “revenge tax,” part of his sweeping fiscal package dubbed the One Big Beautiful Bill Act. This measure threatened punitive taxes on foreign companies from countries enforcing the global minimum tax or digital services taxes—many of which disproportionately affect U.S. tech giants. Fearing economic retaliation, G7 nations opted for compromise.
Critics argue the exemption undermines years of progress. Organizations like Oxfam warn that it could discourage other countries from enforcing tax fairness, giving U.S. corporations an unfair edge over European competitors. The deal also raises concerns about sovereignty, as nations may feel pressured to align with U.S. tax preferences to avoid sanctions.
Supporters, however, frame the agreement as pragmatic diplomacy. The Canadian presidency of the G7 described it as a step toward “stabilizing the international tax system” and fostering constructive dialogue on digital taxation and fiscal sovereignty.
Still, the deal is not yet binding. It must be reviewed by the broader OECD Inclusive Framework, which includes over 140 countries. European finance ministers are divided—some calling it an “honorable compromise,” others warning of a dangerous precedent.
In essence, the G7’s decision reflects a delicate balancing act: between cooperation and coercion, fairness and flexibility. As global economies grapple with digital transformation and rising inequality, the question remains—can tax justice survive political pressure?