Talking Tax What the G7 Did to the Global Tax Pact, and What Comes Next
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Jul 2, 2025 Lauren Vella, a Bloomberg tax reporter specializing in international tax developments, delves into the recent G7 agreement altering the global minimum tax. She explains the significance of the U.S. exemptions and the complexities this introduces. The podcast also discusses Canada's repeal of its digital services tax to rekindle trade talks with the U.S. Vella highlights the backlash from other nations feeling pressured to comply with U.S. changes and the broader implications for global tax reform in a shifting political landscape.
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Purpose of Global Minimum Tax
- The global minimum tax (Pillar Two) applies a 15% tax floor on multinational companies' profits globally.
- This aims to stop companies from shifting profits to tax havens and to counter harmful tax competition.
U.S. Side-by-Side Tax System Plan
- The U.S. seeks side-by-side treatment of its internal tax system and the global minimum tax rules.
- This means U.S. companies could be exempt from key Pillar Two enforcement rules.
Impact of U.S. Exemptions on Global Tax
- Exempting U.S. companies from Pillar Two rules challenges the global tax pact's level playing field.
- However, U.S.'s own GILTI tax resembles Pillar Two outcomes despite structural differences.