Global Minimum Tax Deal Advances With Partial Reprieve for U.S.-Based Companies

On February 2, 2023, the Organisation for Economic Co-operation and Development (OECD) described how the U.S. tax system will interact with the minimum taxes being implemented in other countries. These rules provide U.S. companies with a partial reprieve through 2025. This new guidance spelled out how the existing 10.5% minimum tax on U.S. companies' foreign income interacts with other countries' new taxes. However, other countries will only be so tolerant of the U.S.'s delayed implementation. In addition, U.S. lawmakers are increasingly hesitant about a coordinated global corporate tax increase because of the possibility that such an increase will primarily affect U.S. companies. The United States will need to figure out what can be done to alleviate these concerns before 2025.