G7 Carves Out U.S. Firms From Global Minimum Tax, Canada Drops DST

3 min read
G7 Carves Out U.S. Firms From Global Minimum Tax, Canada Drops DST
Tax News

The Lead Story

Headline: G7 Gives U.S. Multinationals a Hall Pass on the Global Minimum Tax

The Big Picture
The G7’s last-minute compromise on the OECD-backed global minimum tax just rewrote the rulebook—again. By carving out U.S. companies from Pillar 2 obligations, finance ministers say they’ve brought “stability” to a shaky international tax order. Critics see it as anything but settled.

The Details
The agreement, struck in Venice on 30 June, means American firms will not face the 15 percent top-up tax other multinationals were bracing for, fDi Intelligence reports. Instead, Washington and its trading partners will hammer out separate rules for how—and whether—the U.S. implements Pillar 2 domestically.

Real-estate investors cheered. The industry group Nareit said the deal “provides greater certainty and stability” for U.S.-based REITs expanding overseas, according to its statement. But the applause wasn’t universal. The FACT Coalition blasted the carve-out as “a win for tax havens and multinational corporations,” arguing it preserves incentives to park profits offshore, the group told FACT Coalition.

Across the Atlantic, London welcomed the move. The UK Treasury said the compromise removes a feared Section 899 ‘revenge tax’ that would have targeted British companies, giving them “certainty” while it continues to pursue aggressive avoidance crackdowns, according to Wired Gov.

Why It Matters / What They’re Saying
The reaction was swift. Supporters argue the exemption keeps the U.S. at the negotiating table and prevents a fresh round of digital-tax trade wars. Skeptics counter that excluding the world’s largest economy guts the very purpose of a global minimum tax. As fDi Intelligence notes, the carve-out “underscores ongoing uncertainty” about whether truly multilateral reform is still possible.

Around the Tax World

Canada scraps its digital services tax. Ottawa shelved the levy on big tech firms to smooth trade talks with Washington ( Tech in Asia).

Textile sector takes note. The G7 exemption signals U.S. multinationals—including apparel giants—won’t face new global top-up bills, Fibre2Fashion reports ( Fibre2Fashion).

UK doubles down on avoidance. Even after dropping Section 899, HM Treasury says tackling “aggressive tax planning” remains a priority, Wired Gov adds.

By the Numbers

Prime Number: 899 – That’s the now-abandoned U.S. Internal Revenue Code section the UK dubbed a “revenge tax” before the G7 compromise swept it off the table (Wired Gov).

Looking Ahead

All eyes now turn to the OECD’s October meeting, where negotiators will try to stitch the U.S. carve-out into a broader Pillar 2 framework—and figure out whether other nations want their own hall passes.

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Prepared by MyTax - mytax.com.ng