U.S. Administration Rejects OECD Global Tax Deal to Reassert Sovereignty

| Donald Trump signs executive orders on Inauguration Day 2025

In a recent memorandum, the U.S. administration has taken a firm stance against the OECD Global Tax Deal, a policy endorsed by the previous administration. According to the new administration, the deal extends extraterritorial jurisdiction over American income and limits the United States' ability to craft tax policies that support American businesses and workers. The document claims that this move aims to protect U.S. companies from retaliatory international tax regimes that could arise if the U.S. fails to align with foreign tax objectives.

SECTION 1: U.S. WITHDRAWAL FROM THE GLOBAL TAX DEAL

The memorandum directs the Secretary of the Treasury and the Permanent Representative of the United States to the OECD to inform the OECD that any commitments made by the previous administration regarding the Global Tax Deal are void within the U.S. unless Congress passes legislation to adopt its provisions. Furthermore, the Secretary of the Treasury and the U.S. Trade Representative are tasked with implementing steps to enforce the memorandum's conclusions.

SECTION 2: MEASURES AGAINST DISCRIMINATORY TAX PRACTICES

The memorandum mandates the Secretary of the Treasury, in collaboration with the U.S. Trade Representative, to investigate whether foreign countries are violating tax treaties with the U.S. or adopting tax rules that disproportionately impact American companies. The findings, along with a list of potential protective measures or actions, are to be presented to the President through the Assistant to the President for Economic Policy within 60 days.

SECTION 3: IMPLEMENTATION AND LEGAL PROVISIONS

The memorandum clarifies that it does not alter the legal authority of any executive department or agency, nor does it affect the functions of the Office of Management and Budget concerning budgetary or legislative proposals. It also states that the memorandum will be implemented in line with applicable laws and appropriations, and it does not create enforceable legal rights against the U.S. government or its representatives.

SOURCE/RECOMMENDED READ: 

• The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal) – The White House