Global Minimum Tax Without the U.S.: Big Tech Taxation Neutralized as the International Tax Order Wavers

OECD–G20 overhaul exempts U.S. big tech from the global minimum tax
Framework preserves tax incentives for companies with tangible investments
Criticism mounts that the original goal of curbing tax avoidance has been undermined

The United States has succeeded in excluding its domestic companies from the scope of the global minimum tax, opening a serious fissure in international tax cooperation. Under the revised framework agreed by the Organisation for Economic Co-operation and Development (OECD) and the Group of 20 (G20), U.S. big tech companies have been relieved of the global minimum tax burden while simultaneously securing a structure that allows them to retain tax incentives tied to tangible investment. Critics argue that the fundamental purpose of the regime—strengthening taxation of multinational corporations and preventing tax avoidance—has been significantly eroded, with the international tax order yielding to U.S. power politics.

U.S. Reaches Global Minimum Tax Exception Agreement With 145 Countries

According to local media outlets including ABC on the 7th (local time), the U.S. Treasury announced on the 5th that it had reached an agreement with more than 145 countries participating in the OECD–G20 Inclusive Framework (IF) to exempt U.S.-headquartered companies from the global minimum tax under OECD Pillar Two. The IF is an international tax reform body led by the OECD and G20 that has spearheaded revisions to global tax norms, including the introduction of the global minimum tax. The United States, however, has maintained its position that it will preserve its existing corporate tax system and the Net CFC Tested Income (NCTI) regime, which operates on principles similar to a global minimum tax.

Introduced in 2021, the OECD global minimum tax has been in force since January last year in jurisdictions including South Korea, the European Union, and Japan. Designed to prevent multinational companies from shifting profits to low-tax jurisdictions, the regime allows other countries to impose a top-up tax when firms with global revenues exceeding approximately $825 million are subject to an effective tax rate below 15 percent in a given jurisdiction. The measure has widely been interpreted as targeting U.S. big tech firms—such as Google, Amazon, Meta, and Apple—that have generated substantial profits across multiple countries while paying taxes primarily in jurisdictions where their servers are located.

Janet Yellen, who served as U.S. Treasury Secretary under the Joe Biden administration, was a key architect of the global tax agreement and made the adoption of the minimum tax a top priority. At the time, Republicans strongly opposed the plan, arguing that it would undermine U.S. competitiveness. Subsequently, however, the Donald Trump administration moved to reopen negotiations on the broader global minimum tax agreement after withdrawing the so-called retaliatory tax provision during deliberations over the “One Big Beautiful Bill Act” (OBBBA) introduced by Republicans last June. The retaliatory tax clause would have allowed the federal government to impose taxes on investors from countries deemed to levy “unfair foreign taxes” on U.S. companies, including firms with foreign ownership.

Following the negotiations, the Trump administration and Republican leaders offered uniformly positive assessments. Treasury Secretary Scott Bessent described the agreement as “a historic victory that preserves U.S. sovereignty and protects American workers and businesses from extraterritorial overreach.” Senate Finance Committee Chairman Mike Crapo of Idaho and House Ways and Means Committee Chairman Jason Smith of Missouri said in a joint statement that “today marks another important milestone in reversing the Biden administration’s unilateral surrender on global taxation.” OECD Secretary-General Mathias Cormann, who led the renegotiations, characterized the outcome as “a landmark decision in international tax cooperation,” adding that it would help protect national tax bases by reducing tax complexity.

Advantage for Companies With Large-Scale Tangible Investment in the U.S.

The revised IF framework centers on the introduction of a “self-developed qualified domestic minimum top-up tax,” under which multinational enterprises from countries operating their own minimum tax–like systems are exempt from the global minimum tax. Under this standard, the United States’ existing tax structure—combining NCTI taxation on foreign subsidiary income with a statutory corporate tax rate of 21 percent—was recognized as equivalent to a domestic minimum tax. A key change lies in ensuring that various deductions and tax incentives are not disadvantageously reflected in the calculation of the effective tax rate under the global minimum tax. As a result, U.S. big tech companies are excluded from the global minimum tax regime while retaining broad tax incentives linked to tangible investment.

For South Korea, the implications of the overhaul fall into two broad categories. First, domestic companies with substantial overseas facilities and production bases may see a reduction in tax burdens. Even if effective corporate tax rates fall below 15 percent due to various incentives, the revised structure prevents additional top-up taxation, a mechanism likely to benefit firms that have undertaken large-scale tangible investments abroad. Industry observers point to companies such as LG Chem, LG Energy Solution, Samsung SDI, and SK On, which have established battery, materials, and semiconductor production facilities in the United States, as potential beneficiaries.

The impact of the reform is not limited to Korean companies operating overseas. By recognizing tax incentives linked to tangible investment, the new framework may also affect global companies with factories or research and development hubs in South Korea. The country already hosts a wide range of multinational firms across semiconductors, automobiles, batteries, chemicals, materials, pharmaceuticals, and biotechnology. Industry sources cite companies such as ASML of the Netherlands, BMW and Mercedes-Benz of Germany, and BASF as representative examples of firms operating production facilities or research organizations in Korea.

Trump’s ‘America First’ Agenda Erodes International Coordination

Some critics argue that the overhaul represents a retreat in global tax cooperation under pressure from the Trump administration’s America First agenda. The negotiation process shows that President Trump, shortly after taking office last January, declared the global minimum tax agreement void and escalated pressure by adding Section 889, the retaliatory tax provision, to the OBBBA bill. Ultimately, facing the prospect of U.S. tax retaliation, the G7 agreed to exempt U.S. big tech companies from the global minimum tax in exchange for the withdrawal of the retaliatory tax clause. The recognition of exceptions driven by power politics is seen as undermining the normative foundations of international agreements.

Allowing an exception for the United States has also structurally constrained the policy options available to other countries. Strategies aimed at securing additional tax revenues from multinational corporations and easing tax competition through the global minimum tax become far less effective when U.S. firms are excluded. Countries with smaller domestic markets or high dependence on foreign companies, in particular, face an asymmetric situation in which they must apply strict taxation to domestic firms while being unable to impose the same standards on U.S. companies. Critics warn that this undermines policy consistency and complicates efforts to design fiscal expansion or industrial strategies.

Beyond these concerns, observers note that the original objective of the global minimum tax—to structurally curb tax avoidance by U.S. big tech—has been substantially weakened. The ability to systematically restrain long-standing tax strategies that shift profits to low-tax jurisdictions via server locations or corporate structures has diminished. Should the global minimum tax evolve into a regime defined by exceptions rather than universal rules, big tech companies may continue to minimize their effective tax burdens through the use of tax havens. According to the EU Tax Observatory, U.S. companies still report roughly half of their overseas profits in tax havens.