Trump withdraws from global corporate minimum tax deal

The background: In one of many moves during an eventful first week back in office, the Trump Administration has officially pulled the United States out of the global corporate minimum tax deal. The agreement was established in 2021 under Biden, and proposed a 15% minimum tax on large multinational corporations. The initiative aimed to tax companies based on where profits are made rather than where they are headquartered.

Trump's new executive order has now voided the agreement in the U.S., citing protection against foreign tax regimes that might disproportionately impact American companies. The U.S. currently maintains a proportionally lower corporate tax rate following Trump's 2017 tax cuts, which could lead to foreign countries imposing a "top-up" tax on U.S. firms.

**Unequal taxation: **The withdrawal throws the future of global tax agreements into uncertainty, as U.S. participation is crucial for the previous scheme's success. Countries like Italy, France, Britain, Spain, Turkey, India, and New Zealand could now pursue unilateral tax regulations, including digital services taxes targeting American tech giants like Meta and Apple.

What to look out for: Trump's memorandum also calls for an investigation into foreign tax practices that might disproportionately affect American companies, with findings due within 60 days in an effort to ensure fair treatment of businesses abroad.

More to come, as we plan to touch base with tax professionals and the companies likely to be impacted to hear their outlook...