Nations to Continue Global Tax Deal Talks After US Ire (2)

Nations involved in the global tax deal negotiations have agreed to remain engaged and continue discussions, according to a statement released by the OECD on Friday.

Members of the Inclusive Framework—a group of countries’ delegates involved in the global tax deal negotiations—said they recognized the “critical importance” of obtaining certainty in the international tax system and agreed to continue discussions of Pillars One and Two of the deal.

The statement was published following a meeting of the Inclusive Framework in Cape Town, which included the US, earlier this week.

The deal, agreed to by over 140 countries in 2021, is made up of two parts: a reallocation of large multinational companies’ residual profits, known as Pillar One, and a 15% global minimum tax, known as Pillar Two. The minimum tax has taken effect in over three dozen countries, while talks around Pillar One have stalled.

Scott Levine, former deputy assistant secretary for international affairs at the US Treasury Department, said he viewed the countries’ statement as a “directionally” positive development.

“The Administration’s decision to continue engagement with the IF in an effort to stabilize the international tax system is itself a departure from its efforts in other international fora,” Levine said.

He added, “although presumably carefully worded to limit any suggestion that the United States is willing to formally negotiate off its public statements on Pillar 2, one can’t help but take some comfort that the US is engaged. We will need to wait and see whether the Administration will seek a compromise so the US tax system can live in relative harmony with the GloBE rules.”

The statement from the Organization for Economic Cooperation and Development follows a memo released by President Donald Trump on Jan. 20, in which he withdrew the US from any commitments made by the Biden administration to the global tax deal.

The memo raised questions about the fate of the deal and how the US would interact—if at all—with the Inclusive Framework in OECD international tax talks.

In Friday’s statement, countries “recognised the continued value” of using the Inclusive Framework as a “platform of collaboration.”

Countries also agreed to assess the OECD work on base erosion and profit shifting, and produce a report that will be shared with the Group of 20 nations later this year.