• Exemption for US parent companies: US parented multinational groups would be excluded from the Income Inclusion Rule and the Undertaxed Profits Rule, recognising the existing US minimum tax rules.
• Preservation of policy objectives: The system ensures that risks to a level playing field and base erosion are addressed while maintaining the framework's core goals.
• Simplification of compliance: Efforts will be made to simplify the administration and compliance of the Pillar 2 rules.
• Alignment of tax credit treatments: Changes will be considered to align the treatment of substance-based non-refundable tax credits with refundable tax credits.

OECD's perspective

The OECD Secretary-General has lauded the G7's statement as a milestone in international tax cooperation. The global minimum tax initiative is seen as a pivotal reform to enhance fairness and effectiveness in the global economy. The OECD emphasises the importance of multilateral agreements to limit corporate tax competition and provide businesses with stability and certainty.

US legislative highlights

• Removal of Section 899 in the Senate version of One Big Beautiful Bill Act – this Section would have operated withholding tax on US source payments received by a foreign person resident in a “discriminatory foreign country”.
• The Qualified Domestic Minimum Top-up Tax has been recognised for its success in addressing base erosion.

The next steps involve engaging with the broader OECD Inclusive Framework to refine and implement the side-by-side system, ensuring it is acceptable and effective for all jurisdictions.

US Treasury’s statement can be found here and Canada’s statement here.

The statement by the OECD can be accessed here.