G-7 countries agree to the ‘Side by Side' tax deal for US companies: Here's what it means
The US and fellow Group of Seven nations have reached an agreement aimed to prevent a global tax war, by establishing a 'side-by-side' tax system.
This new arrangement would exempt US companies from some elements of an existing global agreement.
A key component of this deal involved the US officials agreeing to remove Section 899 from President Donald Trump's tax-cut bill,
This provision, often referred to as the 'revenge tax' would have increased taxes on the US income of non-US-based businesses and individuals from countries whose tax policies Washington deems discriminatory.
The side-by-side system could 'provide greater stability and certainty in the international tax system moving forward,' the G-7 advanced economies said Saturday in a statement.
As part of the agreement, the other G-7 members will support the US's stance in ongoing negotiations with the Group of 20 countries and the Organization for Economic Cooperation and Development, which has been hosting global talks on corporate taxes, with some proposals drawing opposition from the US.
Officials from the G-7 said they look forward to coming up with a solution that is 'acceptable and implementable to all,' according to the statement.
While some progress has been made, the issue of 'digital services taxes,' remains only partially addressed. Some countries currently levy these taxes on the profits of US-based technology companies including Meta Platforms Inc. and Amazon.com Inc.
The effort to establish a side-by-side system will include a 'constructive dialogue on the taxation of the digital economy and on preserving the tax sovereignty of all countries,' according to the G-7 statement.
US Treasury Secretary Scott Bessent said on Thursday that he had asked Senate and House leadership to remove Section 899 from the so-called One Big Beautiful Bill Act after securing G-7 backing for the side-by-side system. Senate Republicans deleted the section in the latest version of the tax bill.
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