US Withdraws from OECD Global Tax Treaty

On January 20, US President Donald Trump signed a Memorandum on the effective withdrawal of the United States from a global tax deal which taxes large multinational corporations at a 15% rate.

The memorandum containing the announcement states that the global tax treaty “has no force or effect in the United States.” The reasons given for this are:

– “the OECD Global Tax Deal supported under the prior administration not only allows extraterritorial jurisdiction over American income but also limits our Nation’s ability to enact tax policies that serve the interests of American businesses and workers”;

– “because of the Global Tax Deal and other discriminatory foreign tax practices, American companies may face retaliatory international tax regimes if the United States does not comply with foreign tax policy objectives.”

The President of the United States has instructed to inform the OECD that any commitments made by the previous administration under the treaty are not legally binding in the country without action of the Congress. The Secretary of the Treasury, in collaboration with the United States Trade Representative, shall investigate whether any foreign country is not complying with any tax agreement with the United States, or whether any tax rules they have enacted (or are planning to enact) would disproportionately affect US companies, and develop proposals for protective measures within 60 days.

Memorandum on the Global Tax Deal