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Global Tax Policy • US Executive Action • OECD • Pillar Framework • Economic Sovereignty

US Withdraws from OECD Global Tax Deal Under President Trump’s Executive Order

Shortly after assuming office, US President Donald Trump issued an executive order withdrawing the United States from the OECD Global Tax Deal. This agreement, endorsed by over 140 countries, aimed to address corporate tax avoidance and promote a fairer international tax system.

🧾 What is the OECD Global Tax Deal?

• Pillar 1: Reallocates profits of multinationals to countries where revenue is generated, not just where companies are headquartered
• Pillar 2: Introduces a global minimum corporate tax rate of 15% to curb tax base erosion
• Intended to combat tax havens and profit shifting by tech giants and large MNCs
• Developed under the leadership of the Organisation for Economic Co-operation and Development (OECD)

🇺🇸 US Executive Order – Key Highlights

• Labels the tax deal as “extraterritorial overreach” and a threat to US sovereignty
• Claims it limits domestic policymaking and hampers American competitiveness
• Official stance: The US will not implement the global minimum tax or profit reallocation measures

🌍 Global Impact

• Over 50 jurisdictions were preparing to implement GloBE (Global Anti-Base Erosion) rules
• US exit throws global tax alignment into uncertainty
• Countries may reassess implementation timelines and legal frameworks
• Risks of a fragmented global tax environment rise, especially with diverging regional approaches

🇮🇳 India’s Position

• India has maintained a cautious stance on adopting GloBE rules
• In Union Budget 2024, India removed the 2% equalisation levy, easing tensions with the US
• Has not enacted domestic Pillar 2 rules
• Expected to observe developments before revising its tax strategies
• Minimal short-term impact on India’s tax revenues due to pre-existing digital tax measures

📊 The Role of the OECD

• The OECD (Organisation for Economic Co-operation and Development) comprises 37 member countries
• Represents:
  • ~60% of global GDP
  • ~75% of global trade
• Offers a platform for policy dialogue, research, and development of global economic norms