The U.S. Treasury Secretary announced on Monday that the United States has finalized an agreement to exempt U.S. multinational corporations from paying the OECD’s Pillar Two global minimum tax.

The agreement was reached in coordination with Congress and over 145 countries under the OECD/G20 Inclusive Framework, aiming to protect incentives such as the R&D tax credit. The agreement recognizes the U.S.’s tax sovereignty over its companies’ global operations, as well as other countries’ sovereignty over business activities within their jurisdictions.

The Treasury Department stated it will continue consultations with other countries to support the implementation of the agreement and promote international tax stability.

U.S. Treasury

The United States Department of the Treasury is a federal executive department established by an Act of Congress in 1789 to manage government revenue, coinage, and fiscal policy. Its iconic headquarters, the Treasury Building located adjacent to the White House, was constructed in stages between 1836 and 1869 and is one of the oldest departmental buildings in Washington, D.C. The department itself plays a central historical role, having been instrumental in financing the nation’s wars, managing the national debt, and producing currency since the country’s founding.

OECD

The Organisation for Economic Co-operation and Development (OECD) is an international intergovernmental economic organization founded in 1961, succeeding the post-World War II Marshall Plan’s Organisation for European Economic Co-operation (OEEC). Its primary mission is to promote policies that improve economic and social well-being globally by providing a forum for governments to collaborate, share experiences, and seek solutions to common challenges.

G20 Inclusive Framework

The G20 Inclusive Framework is not a physical place or cultural site, but a global policy initiative. It was established in 2016 by the G20 and OECD to tackle tax avoidance by multinational enterprises, specifically through the Base Erosion and Profit Shifting (BEPS) project. Its most significant achievement has been facilitating the international agreement on a global minimum corporate tax rate.

Congress

“Congress” most commonly refers to the United States Congress, the legislative branch of the U.S. federal government. Established by the Constitution in 1789, it is a bicameral body consisting of the Senate and the House of Representatives, responsible for making federal laws. Its history is central to the development of American democracy, from its first meeting in New York City to its permanent home in the U.S. Capitol building in Washington, D.C.