US Stays in OECD Global Tax Talks Despite Trump's Rejection

In what’s shaping up to be another headline-sparking twist in global tax policy, President Donald Trump kicked off his second term with a pen stroke that made waves from D.C. to Brussels. His executive order on January 20, 2025, effectively pulled the United States out of the OECD’s long-in-the-works global tax agreement, a deal originally designed to put Big Tech and multinational giants on a tighter tax leash. The move wasn’t just bold. It was loud. Trump declared the “Global Tax Deal has no force or effect in the United States,” ending the country's prior commitments to the OECD’s two-pillar plan unless Congress formally acts. And just like that, tax practitioners across the globe found themselves reaching for their calculators and stress balls. So, what gives? What’s in this so-called tax deal, why did it matter, and what’s Uncle Sam planning instead? Let’s unpack this, layer by layer.

What Is the Global Tax Deal

Let’s rewind to October 2021. Over 130 countries came together to ink a historic agreement under the OECD’s guidance. Its mission? Curb tax base erosion and profit shifting (BEPS) and tackle the digital economy’s elusive tax trails.

The deal had two key components:

• Pillar One: Gave countries the right to tax multinational corporations, especially Big Tech, in locations where users and customers reside, not just where companies are headquartered.
• Pillar Two: Introduced a 15% global minimum corporate tax rate to squash the incentive for corporations to stash profits in tax havens.

While Pillar Two saw real traction, implemented in over 40 countries and counting, Pillar One remained stuck in the political slow lane. Why? Because for it to work, countries (including the U.S.) must revise international tax treaties. And well… try getting Congress to agree on anything faster than a tax refund in April.

Executive Order Breakdown

Trump’s January 2025 executive order effectively iced both pillars. It also went further by directing the Treasury to:

• Investigate foreign countries’ adherence to U.S. tax treaties.
• Identify and counteract any extraterritorial tax policies that "disproportionately affect American businesses."
• Dust off Section 891 of the Internal Revenue Code, which allows for retaliatory double taxation against foreign entities operating in the U.S.

In short, Trump’s tax stance screams: America First, OECD Second (or maybe tenth).

Current Tax Structure

While most of the world was getting cozy with the 15% global floor, the U.S. already had its version: GILTI, the Global Intangible Low-Taxed Income regime. Introduced in 2017 under the Tax Cuts and Jobs Act, GILTI applies to foreign income of U.S. multinationals and aims to discourage offshoring by taxing low-taxed foreign earnings.

The thing is, GILTI isn’t the same as Pillar Two:

• It has quirks like a lower effective rate (around 10.5%).
• It doesn't offer the same treatment of tax credits, especially R&D incentives.
• And crucially, it was never intended as a global benchmark.

So, while GILTI gives the U.S. a “been there, done that” card, it doesn’t line up neatly with OECD’s playbook and U.S. lawmakers aren’t eager to realign.

Allies Sigh, Rivals Watch

OECD Secretary General Mathias Cormann didn’t pack up the tent just yet. He noted ongoing technical talks with the U.S. and emphasized that "multinationals operate across borders, so do tax issues." Across the pond, EU officials like Valdis Dombrovskis called for dialogue, not drama, expressing hope that the U.S. might still rejoin the party. Meanwhile, countries like France, Spain, Canada, and Austria are already prepping or expanding digital services taxes (DSTs)—which, you guessed it, mostly target U.S. tech giants. But there’s a catch. A fractured tax map could mean:

• U.S. companies are paying different taxes in different countries.
• Rising compliance costs for multinationals.
• And a fresh batch of trade spats, especially if the U.S. retaliates with tariffs or Section 891 powers.

For now, the UK seems to be playing nice, potentially scrapping its £800M DST in exchange for fewer U.S. trade penalties.

The Clock’s Ticking

Here’s what we know:

• Pillar One: Effectively stalled without U.S. buy-in. The global “user-based taxing rights” revolution is on hold.
• Pillar Two: Marches on, with safe harbors and tweaks until 2026. But U.S. firms could still get caught in the net abroad, especially if the undertaxed profits rule (UTPR) is applied extraterritorially.
• Retaliation Watch: Trump’s team is exploring options. Expect more talk of tariffs, treaty reviews, and maybe a splash of Section 891.
• OECD Relations: Not dead, but chilly. As Cormann put it, multilateralism is hard, but necessary.

What’s more, the U.S. hasn’t left the OECD, so there’s room for negotiation. Some speculate Trump might seek carve-outs or exemptions instead of killing the whole deal. Others think a full-fledged tax war could break out if things escalate.

Same Tax Drama, New Plot Twist

If there’s one takeaway from this tax soap opera, it’s that global rules only work when the big players play ball. The U.S., with its corporate giants and economic muscle, can make or break international efforts. For tax professionals, finance execs, and multinational CFOs, it’s time to keep both eyes on the policy radar. Whether you’re recalculating deferred tax liabilities or wondering what your R&D credits are worth in Paris or Berlin, the message is clear: things just got a whole lot more complex. So, grab your coffee, check your treaties, and maybe keep Section 891 bookmarked, just in case. Want sharper insights in less time? Subscribe to the MYCPE ONE Insights newsletter now.