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G7 exempts US multinationals from global minimum tax rules

  • By Al Mayadeen English
  • Source: Agencies
  • 28 Jun 2025 23:49
3 Min Read

The G7 agrees to exempt US companies from IIR and UTPR under a new system recognizing existing US tax rules, easing tensions over global minimum tax efforts.

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  • Canada's Prime Minister Mark Carney walks with President Donald Trump after a group photo at the G7 Summit, Monday, June 16, 2025, in Kananaskis, Canada (AP)
    Canada's Prime Minister Mark Carney walks with President Donald Trump after a group photo at the G7 Summit, Monday, June 16, 2025, in Kananaskis, Canada (AP)

The Group of Seven (G7) nations announced on Saturday that they have reached an agreement to exempt US multinational companies from key components of the global minimum tax regime, namely the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR), in recognition of existing US domestic tax laws.

The decision, outlined in a joint statement, responds to a proposal advanced by US Treasury Secretary Scott Bessent earlier this year, which called for a "side-by-side" arrangement acknowledging the US minimum tax framework as functionally equivalent to global standards.

A carve-out for US-based multinationals

Under the agreed framework, US-parented corporate groups will be excluded from both the IIR and the UTPR in relation to their domestic and foreign earnings. The IIR and UTPR are key enforcement tools of the OECD-led 15% global minimum tax plan, aimed at curbing tax base erosion and profit shifting.

“A side-by-side system would fully exclude US parented groups from the UTPR and the IIR in respect of both their domestic and foreign profits,” the G7’s joint statement said.

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The statement added that this compromise is intended to “facilitate further progress to stabilize the international tax system” and promote constructive dialogue around “preserving the tax sovereignty of all countries.”

Moody's downgrades US credit rating

Moody’s Investors Service has downgraded the United States’ long-term issuer and senior unsecured ratings from AAA to Aa1, citing persistent fiscal challenges and rising debt levels. The agency also revised the country’s outlook from negative to stable.

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s stated. The agency emphasized that the US fiscal trajectory continues to deteriorate, both "compared to its own past" and "compared to other highly-rated sovereigns."

Looking ahead, Moody’s projects the federal deficit will expand to nearly 9% of GDP by 2035, up from 6.4% in 2024. This growth is expected to be driven by increasing interest obligations, rising entitlement spending, and limited revenue expansion. The US debt-to-GDP ratio is also forecast to climb to 134% by 2035, a sharp increase from 98% in 2024.

Trump administration slams downgrade as politically motivated

The rating cut triggered swift backlash from President Donald Trump’s administration. White House spokesperson Kush Desai dismissed Moody’s decision as inconsistent and politically selective.

“If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded,” Desai told CBC News. He added that the Trump administration is committed to reversing the trend through aggressive fiscal reforms, including what he called “The One, Big, Beautiful Bill to get our house back in order.”

Communications Director Steven Cheung also questioned the impartiality of Moody’s chief economist, Mark Zandi.

“An Obama advisor and Clinton donor who has been a Never Trumper since 2016,” Cheung said. “Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again.”

  • United States
  • G7
  • US Treasury
  • OECD
  • Scott Bessent

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