US companies to benefit from a new G7-backed ‘side-by-side’ global tax solution, easing compliance with OECD rules while preserving American tax sovereignty.
New Delhi [India], June 29 — In a significant development, the Group of Seven (G7) nations has agreed to a side-by-side global tax agreement that will exempt US-parented multinational companies from key provisions of the OECD’s global tax framework. According to a joint statement released by the G7, including the United States and Canada, the agreement allows American firms to be taxed solely under US domestic laws for both foreign and domestic profits.
This proposal, detailed under Canada’s G7 presidency, reflects concerns raised earlier this year by the US Treasury Department regarding the Pillar 2 rules negotiated under the OECD/G20 Inclusive Framework on BEPS (Base Erosion and Profit Shifting). The U.S. advocated for the ‘side-by-side’ solution, which would exempt US-headquartered firms from the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) in recognition of America’s existing minimum tax regimes.
The G7 statement clarified that the side-by-side model would “provide greater stability and certainty in the international tax system moving forward,” while supporting dialogue on digital economy taxation and safeguarding national tax sovereignty.
The US Treasury emphasized the strategic value of this shift, especially after the removal of Section 899 from the Senate version of the One, Big, Beautiful Bill. This move is now seen as helping maintain the momentum of Inclusive Framework jurisdictions in combating tax avoidance globally.
“Following the removal of Section 899 from the Senate version… and the consideration of the Qualified Domestic Minimum Top-up Tax’s success, there is a shared understanding that a side-by-side system could preserve important gains made under the Inclusive Framework,” the Treasury stated in a post on X.
The United Kingdom also welcomed the removal of Section 899, which had previously raised concerns among British firms fearing higher tax exposure. The new framework is expected to alleviate such risks for UK-based multinationals.
G7 leaders reiterated their commitment to collaborative progress, pledging to develop “a solution that is acceptable and implementable to all.”
Meanwhile, earlier this year, former US President Donald Trump, through an executive order, declared that the 2021 global corporate minimum tax agreement, brokered by the Biden administration and endorsed by nearly 140 countries, would not be applicable in the United States.
Trump also warned of retaliatory tax measures against nations enforcing the global minimum tax on US firms—a move that had raised tensions and economic uncertainty for foreign businesses operating within the U.S.
As discussions move forward within the Inclusive Framework, the side-by-side tax system marks a pivotal moment in the global taxation debate, signaling a potential shift toward flexible and sovereign-aligned solutions.