Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.
The US is engaging in efforts to negotiate a landmark global tax deal despite President Donald Trump’s criticism of the agreement, according to the OECD. Secretary-general Mathias Cormann told the Financial Times the US was taking part in active discussions, including technical concerns on implementation. “We are continuing the conversation,” he said on the sidelines of the Delphi Economic Forum in Greece.
The comments show the deal to close tax loopholes for Big Tech groups and multinationals could get US backing. More than 135 countries signed up to the biggest corporate tax reform in more than a century more than four years ago, but since then half the agreement has not been enacted.
Delegates from those countries said they held ‘constructive’ talks on the agreement in Cape Town, South Africa, last week. That stands in stark contrast to the hostile tone Trump struck in a memorandum signed on his first day in office in January which said the “global tax deal has no force or effect in the US”.
The president’s memo had led many observers to conclude the US had in effect pulled out of the OECD deal, but Cormann said he was ‘not sure’ Trump’s comments equated to a withdrawal.
He added: “[Trump] issued a memorandum on the 20th of January and that says what it says. But we remain engaged in discussions with the United States.”
“The OECD was notified that the terms of the global tax deal agreed to by the prior administration are not acceptable,” said a Treasury spokesperson. “The Treasury continues to seek a path forward that protects American interests and US tax sovereignty.”
The first pillar of the reform — making Big Tech groups and multinationals pay more tax in the places they do business — has not been agreed, Cormann said, but he stressed conversations are ongoing. He warned failure to deliver a multilateral solution could result in a proliferation of unilateral digital services taxes around the world, a scenario he said would be damaging for global trade and growth.
Pillar one requires US backing to come into force, because countries need to change their international tax treaties including with the US, to bring it into effect.
The second pillar, the global minimum tax, came into effect from last year and has been enacted in more than 40 countries out of the 141 signatories. It does not require US backing, as nations can introduce it unilaterally. However, despite it having been enacted in some capitals, countries at the OECD are refining the details, with the organization regularly updating guidance on the rules.
Cormann said the US had raised “specific technical concerns” on the implementation of the second pillar which introduces a global minimum 15 per cent corporate tax rate. It had raised questions including about a rule on undertaxed profits, and how research and development tax credits factor into effective tax rate calculations. However, he said these were being actively discussed.
Sandy Bhogal, partner and co-chair of tax at law firm Gibson Dunn, said he could not see the first pillar targeting Big Tech groups and multinationals happening. ‘‘I cannot see how it can be made to appease the US without fundamental reform,’’ he said.
“The Trump administration is unhappy about the undertaxed profits rule aspect of pillar two, and so that would have to change as well. I think we are a long way away from US adoption of either.”
Cormann added international tax co-operation remains essential to prevent both double taxation and no taxation. “Multinationals operate across borders — and so do tax issues. Without co-operation, everyone loses.”
“If we can’t find a satisfactory multilateral solution, then the risk grows that countries will take matters into their own hands,” he said.
Cormann also warned sweeping new tariffs risk triggering slower global growth and higher inflation, adding to the economic challenges facing policymakers.
The recent tariff announcements — if implemented as outlined — would contribute to a “further contraction in global growth and higher inflation”, he said, though he stopped short of forecasting a global recession.
While the OECD is not expected to release updated forecasts until June, he confirmed the organization was reassessing its projections in light of developments since early April. The March forecast had cut global growth by 0.2 percentage points for this year and 0.3 percentage points for 2025.
Cormann also raised concerns about rising global fragmentation. “A trade war is in nobody’s interest,” he said. “Lower global growth leads to lower incomes and higher prices — including in the US.”
He described the current moment as a critical juncture for Europe and multilateralism more broadly. “We are committed to working with all democratically elected governments,” he said. “Multilateralism is hard — but it’s never been more essential.”
Additional reporting by Claire Jones in Washington
