G7 Deal's Details to Dictate How U.S. Cos. Fare Under Pillar 2

Tax attorney Joshua Odintz was cited in a Law360 article exploring what the recently passed federal budget means for the U.S. tax system's ability to coexist with the Organization for Economic Cooperation and Development's (OECD) Pillar Two global minimum tax regime. Before President Donald Trump signed the One Big Beautiful Bill on July 4, 2025, U.S. Secretary of the Treasury Scott Bessent announced an agreement with Group of Seven (G7) countries to protect U.S. tax sovereignty by exempting U.S. multinational corporations from the global minimum tax framework; in return, Republican lawmakers removed Section 899, the so-called "revenge tax" provision, from their budget reconciliation bill. Mr. Odintz characterized this move as a positive one for investors, saying some were putting inbound investments on hold and would have redirected funding elsewhere had Section 899 remained. However, questions continue about the interplay between the U.S. and OECD systems.

Mr. Odintz explained the elimination of the carveout for the qualified business asset income (QBAI) exemption for international tax liabilities in the U.S. bill now marks a distinction from the Pillar Two setup, which could mean the U.S. system is viewed as harsher. He also commented on international tax provisions involving global intangible low-taxed income (GILTI) and foreign derived intangible income (FDII) taxes, saying the expense allocation change for the GILTI expense is "huge" for clients because it will reduce compliance costs. He added eliminating QBAI in the FDII context "creates some incentives to onshore," especially coupled with domestic law changes to allow new manufacturing, production and refining facilities to qualify for immediate business expensing.

READ: G7 Deal's Details to Dictate How U.S. Cos. Fare Under Pillar 2