Last year, the OECD estimated that the GMT would significantly reduce global profit shifting to tax havens and increase corporate income tax revenues by around $200 billion a year. (source: Iakov Filimonov)
Renáta Bláhová is the founding partner of BMB Partners Taxand and tax advisor.
The executive order issued by American President Donald Trump, declaring the intention of the United States to withdraw from the OECD's Global Minimum Tax (GMT), has sparked controversy. Supporters, such as the Cato Institute, have welcomed it, calling the OECD GMT deal a “global tax cartel“. The Financial Times has a striking photo of US tech billionaires at Trump's inauguration, noting that, according to high-ranking EU officials, it is these entrepreneurs who are pushing the president to “take more action in tax matters than trade“. Meanwhile, leading up to the U.S. election, ordinary people seemed to be angry because their tax burden in the U.S. was becoming higher than that of billionaires.
In a presidential executive order issued on Monday, 20 January 2025, Trump stated he would “recapture our Nation’s sovereignty and economic competitiveness by clarifying that the Global Tax Deal has no force or effect in the United States."
The OECD GMT agreement, implemented in the EU from 1 January 2025 in the form of a Directive, mandates that multinational companies with revenues exceeding €750 million are subject to a minimum effective corporate income tax rate of 15%. This was agreed by more than 135 OECD member states in October 2021, including Japan, Canada, South Korea and the UK, and in all EU countries, including Slovakia, where the relevant tax laws have already been adopted.
Last year, the OECD estimated that the GMT would significantly reduce global profit shifting to tax havens and increase corporate income tax revenues by around $200 billion a year - a critical sum for many nations facing poverty.
To achieve this, the OECD GMT needs to be adopted by a critical number of countries to reach the world's largest multinationals. The previous Biden administration supported the GMT deal even though the US has its own equivalent of a minimum 10 % tax, but during the Biden era the US Congress never gave a formal approval. This is despite the fact that hundreds of high-ranking officials and tax specialists there have been working hard on it. Potential policy challenges were hinted at during an international tax conference at the Vienna University of Economics in December.
As I wrote last March in the article EU is trying to harmonize income tax, but will surely run into resistance, the minimum tax is not expected to bring significant new public resources to the European Union, it was mainly supposed to contribute to fairer competition from a European market perspective in the fight with the US tech giants. The latter make extensive use of the fact that virtual presence does not automatically mean an obligation to tax, which has historically relied on the traditional concept of a tax base and tax residence based on the place of effective management of the company. For more details, see also: Historic deal of minimum global tax of 15 percent. Will it become relevant? or Apple apparently pays no tax on European profits anywhere.
Finance managers of European companies are not fans of this legislation either, as the transition to the new GMT rules brings quite heavy administrative complications. As for my personal opinion, if Trump abandons the global minimum tax agreement but manages to secure a peaceful resolution to the war in Ukraine, ensuring its emergence as a strong sovereign state, I would consider it a worthwhile trade-off.
