The Trump administration's opposition to the proposed 15% global minimum tax and its demand that countries exempt U.S. companies by year-end inject uncertainty into tax departments of multinational corporations as they plan for tax year 2026 and beyond.

As part of an Organization for Economic Cooperation and Development (OECD) project, more than 130 countries successfully negotiated two-pillar model rules aimed at combating tax avoidance in 2021. Pillar One seeks to change where multinationals pay taxes, while Pillar Two imposes a 15% global minimum tax on companies with annual revenue exceeding 750 million euros (approximately $873 million).

The Trump administration opposes Pillar Two, arguing that existing U.S. tax policy already establishes a fair global minimum tax for American businesses. Group of Seven (G7) countries want tax jurisdictions—that is, countries adhering to Pillar Two standards—to agree to a "parallel system" that exempts U.S. companies from the proposed 15% global minimum tax. The U.S. Treasury Department has asked countries to agree to the exemption by December 31, even though about 60 countries, including most European Union member states, have already incorporated Pillar Two principles into their laws.

Double taxation threat looms

For U.S. multinationals, failure to reach an agreement would mean higher costs. "For taxpayers, if no deal is reached, it will mean burdensome compliance requirements and double taxation. I think that's the bottom line," said Cory Perry, partner in the Washington National Tax Office of accounting firm Grant Thornton, in an interview.

"This debate is about cooperation between nations versus the sovereignty of countries to establish their own tax systems. That's the theme of all issues: global cooperation versus national sovereignty," said Eric Solomon, former U.S. Treasury Assistant Secretary for Tax Policy and now a partner at Ivins Phillips Barker Chartered, in an interview. "And can the U.S., in negotiations with the OECD and the EU, find some arrangement that makes the parallel system acceptable? Who knows what will happen by December 31."

The OECD did not immediately respond to requests for comment.

Saying no to Pillar Two

The global minimum tax was a key part of the Biden administration's plan to raise tax revenue to fund infrastructure spending and boost U.S. competitiveness.

President Trump signaled a starkly different stance on his first day in his second term, ordering the U.S. to withdraw from any commitments it had made to the so-called "global tax deal" and declaring Pillar Two ineffective in the U.S. A January 20 White House memo to Treasury Secretary Scott Bessent referred to the agreement as the "Global Tax Deal."

Rebecca Burch, Deputy Assistant Secretary for International Tax Affairs at the Treasury Department, reiterated this position on May 16. "We are not adopting Pillar Two. We are not moving toward Pillar Two," Burch said at a Tax Council Policy Institute meeting, according to records approved by meeting speakers and shared with CFO Dive.

G7 countries, ahead of the U.S. passage of the fiscal spending package known as the One Big Beautiful Bill Act (Pub. L. No. 119-21), proposed the "parallel system," recognizing the Global Intangible Low-Taxed Income (GILTI) rules as a robust minimum tax regime and thereby fully exempting U.S. parent company groups from Pillar Two's two key principles: the Undertaxed Profits Rule and the Income Inclusion Rule.

The Tax Cuts and Jobs Act of 2017 (Pub. L. No. 115-97) included the new GILTI rules, a minimum tax designed to combat abuses of shifting income to low-tax jurisdictions. The GILTI rate was initially set at 10.5% and will increase to 12.6% for tax years beginning after December 31.

In her May 16 speech, Burch set a December 31 deadline for reaching an agreement to exempt the U.S. from the application of the 15% tax regime. "By the end of this year, I need the parallel system to be in place," she said.

The Treasury Department did not immediately respond to requests for comment.

'Not a pleasant situation'

Tax attorneys said G7 countries and those that have adopted Pillar Two are likely to reach at least a high-level or in-principle agreement by December 31, which would be negotiated in more detail in 2026. But they added that U.S. companies should prepare to comply with Pillar Two provisions effective January 1 in case no deal is reached.

"If a country's law requires filing such returns and making such calculations, you have to advise clients to prepare those forms and comply with those rules, even if you think those rules will be adjusted, changed, appealed, or deferred," said John Harrington, co-leader of the U.S. tax practice at law firm Dentons, in an interview. "You simply don't know when transitional rules will come out or who will be caught in a bad position. So, this is not a pleasant situation for anyone." Harrington said ongoing trade and tariff negotiations involving the U.S. only complicate matters further.

Grant Thornton's Perry also sees challenges for companies. "I mean, we don't have an agreement. We haven't seen an agreement. Countries are issuing forms. Laws are enacted and legislated, and companies need to file returns by June 2026 or even earlier in many jurisdictions," Perry said. "The deadline is approaching, and if a deal is reached, that's great. But if you're a large multinational filing in 50 jurisdictions, this doesn't happen overnight, so you need to be prepared," Perry added.

Perry said any agreement could still trigger additional reporting requirements for 2025 and 2026, and those costs alone could reach six or even seven figures.

AICPA seeks guidance

In a September 4, 2025 comment letter, the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) asked the OECD and the U.S. Treasury to issue "comprehensive, coordinated guidance to ensure clarity, facilitate compliance, and minimize unnecessary administrative and reporting costs" for the benefit of U.S. multinationals.

Under Pillar Two, companies must calculate their effective tax rate in each jurisdiction where they operate and pay a top-up tax for the difference between that rate and the 15% minimum.

Countries around the world are implementing Pillar Two regimes. According to an analysis by the Tax Foundation, at least 22 of the 27 EU member states have incorporated parts of Pillar Two principles into domestic law pursuant to an EU directive. Perry and others said at least 60 countries have passed at least some domestic legislation to comply with Pillar Two.

Safe harbor?

Despite—or perhaps because of—the significant stakes, Perry and others said they are optimistic that some agreement will be reached before the year-end deadline. "We're very close to the finish line now, but it seems like a deal is within reach before year-end. I mean, that's how it sounds," Perry said.

Others agree. "I think using a safe harbor could be the solution," said James Lawson, managing director at public accounting firm Baker Tilly US, in an interview. Such a safe harbor, he said, could prevent Pillar Two tax treatment from being applied to U.S. companies while the details of how the parallel system operates are finalized.

Perry said a safe harbor would also mean the EU would not have to repeal existing directives and enact new ones, which could be time-consuming and costly.

Solomon said he advises clients to closely monitor the negotiations and consider their potential tax liabilities under various scenarios.

Retaliatory taxes

If the Treasury does not act, Congress might. The version of the One Big Beautiful Bill Act passed by the House included Section 899, which imposed an additional tax on companies incorporated in countries that adopt Pillar Two in a manner deemed "unfair" to the U.S. But the provision was removed in the final version approved by both chambers, following the G7's call for a parallel system. Tax attorneys said Congress could reintroduce and approve the provision as retaliation against Pillar Two countries.

"The Republican-controlled House and Senate do not favor Pillar Two," Lawson said, and if no deal is reached, lawmakers could enact Section 899 or something similar.

"Section 899 is not law, but it's hanging out there. If the issue is not resolved, if the parallel system agreement fails, then if other countries tax U.S. companies, Congress could bring back Section 899," Solomon said.

"I don't want to speculate, but Republicans have made it clear that if we don't reach a deal, they will bring back this retaliatory measure, and I have no reason to doubt they won't," Perry said.