G7 agrees to exempt US, UK firms from hefty tax

The Group of Seven (G7) said on Saturday it had agreed with the United States to support a proposal that would exempt US companies from parts of an existing global tax agreement.

In a statement issued by Canada, which currently holds the G7 presidency, the group said it welcomed Washington’s decision to remove the proposed counter-tax under Article 899 of the tax and spending bill introduced by US President Donald Trump, and to adopt a parallel tax system.

The G7 said the plan acknowledges the current US minimum tax rules and aims to enhance stability in the international tax system.

The US Treasury Department said that following the removal of Article 899 from the Senate version of the tax and spending bill, there is now a shared understanding that a minimum tax regime can maintain the key achievements made by jurisdictions under the Inclusive Framework in tackling base erosion and profit shifting (BEPS).

“We look forward to discussing and developing this understanding within the Inclusive Framework,” the Treasury said in a post on platform X.

British firms also avoided steep tax bills following the repeal of Article 899 from the Trump-era legislation.

The UK government said the agreement provides greater certainty and stability for companies. Some British firms had recently voiced concern about having to pay significantly higher taxes under Article 899, which has now been scrapped.

UK Chancellor Rachel Reeves said the agreement provides much-needed certainty and stability for affected companies following their recent concerns, while stressing the need for further efforts to address aggressive tax planning and tax avoidance.

G7 officials said they look forward to discussing a solution that is acceptable and implementable for all parties.

In January, Trump issued an executive order stating that the global minimum corporate tax agreement no longer applied to the United States, effectively withdrawing from the 2021 deal negotiated under the Biden administration with nearly 140 countries.

He also pledged to impose a counter-tax on countries taxing US companies under the global tax deal, a measure that was seen as harmful to many foreign firms operating in the United States.