The United States has formally distanced itself from the OECD Global Tax Deal. In a presidential memorandum dated 20 January 2025, addressed to the Secretary of the Treasury, the US Trade Representative and the US Permanent Representative to the OECD, the President states that the deal supported by the previous administration has no force or effect in the United States.
The memorandum argues that the deal allows extraterritorial jurisdiction over American income and limits the ability of the United States to enact tax policies that serve the interests of American businesses and workers. It does not name any foreign country or specific tax measure.
What the memorandum orders
Section 1 directs the Treasury Secretary and the Permanent Representative to the OECD to notify the OECD that any commitments made by the previous administration on behalf of the United States with respect to the Global Tax Deal have no force or effect within the United States unless Congress adopts the relevant provisions in legislation. The Treasury and the Trade Representative are told to take any additional steps within their authority to give effect to that position.
Section 2 opens a second track. The Treasury, in consultation with the Trade Representative, must investigate whether any foreign countries are not in compliance with tax treaties with the United States, or have, or are likely to put in place, tax rules that are extraterritorial or disproportionately affect American companies. The Treasury must then develop and present options for protective measures or other actions in response, with findings and recommendations due to the President within 60 days.
What it means for multinationals
The OECD Global Tax Deal includes the Pillar Two global minimum tax, which many jurisdictions have already written into domestic law, including income inclusion and undertaxed profits rules that can reach the profits of groups headquartered elsewhere. The memorandum does not change those foreign laws, and it does not itself repeal any US statute. What it does is signal that the US executive will not treat the deal as binding at home and that Washington is preparing a response to foreign taxes it regards as discriminatory or extraterritorial.
For US-parented groups and for other countries applying the OECD rules, the next milestones are the Treasury's report within 60 days and any OECD discussion of how the US position fits with the existing framework. Groups planning their Pillar Two compliance for 2024 and 2025 will need to follow both tracks closely.
