How the Global Minimum Corporate Tax Became an Illusion
In 2021, we described the global corporate tax as a scam. Five years on, here we are.
When it comes to global—but not universal—agreements, the Paris Climate Accord was the benchmark. We have seen what became of it, and what remains of it. The United States withdrew, and with or without Washington, the accord has remained a paper agreement—neither binding nor enforceable in the way treaties are.
The same applies to the global minimum tax, which aims to subject multinationals with annual revenues above €750 million to a minimum tax rate of 15%, wherever they and their subsidiaries operate. The objective is to curb tax optimisation and prevent profits from being artificially shifted to low-tax jurisdictions.
Like many countries, the United States has neither signed nor implemented the agreement. Of the 140 countries that signed in 2021, only about half have applied it so far, nearly half of them members of the European Union.
Yet the United States has walked away with the jackpot. Without signing the agreement, it secured an exemption for its multinationals—led by the GAFAM giants—on the grounds that they already pay a domestic minimum tax of 15% through the Corporate Alternative Minimum Tax (CAMT), introduced under the Inflation Reduction Act (IRA) in 2022.
A brief explanation is required to understand what follows. The global minimum tax was designed to ensure that multinationals pay at least a 15% effective tax rate on their profits in each country where they operate. If the effective rate in a host country is below 15%, a top-up tax is levied first by that country through the Qualified Domestic Minimum Top-up Tax (QDMTT). In other words, the country where the profit is generated has first claim.
If that country has no QDMTT—often the case in developing or emerging economies due to limited resources and administrative capacity—the Income Inclusion Rule (IIR) applies. This allows the country where the multinational’s parent company is headquartered to collect the top-up tax.
If neither the QDMTT nor the IIR applies, the final backstop is the Undertaxed Payments Rule (UTPR). This last layer allows the top-up tax to be collected by other countries where the multinational group operates, theoretically ensuring that no under-taxed profit slips through the net.
But back to the special status granted to the United States. Its exemption from a scheme meant to be global—though not universal—deals a serious blow to efforts to curb tax avoidance. Several billion euros are expected to evaporate (the exact figure has yet to be officially calculated), out of the €140 to €180 billion in additional annual tax revenues initially projected worldwide.
More important than the headline figures, however, is how these revenues are distributed. Unsurprisingly, the most developed countries—and those that have best protected their tax base by implementing a QDMTT—stand to gain the most. Advanced low-tax jurisdictions such as Ireland, the Netherlands or Singapore are also likely to benefit, precisely because they have adopted a QDMTT.
The biggest losers are developing countries. Few have implemented a QDMTT or an IIR and therefore depend on the UTPR—where they are likely to collect only crumbs. The allocation key under the UTPR is based on the number of employees and the value of tangible assets, not on sales, value creation, or the location of under-taxed profits. As a result, the mechanism structurally favours countries with a strong industrial and wage base—that is, rich countries—at the expense of developing ones.
A distortion of competition?
The exemption also creates a glaring asymmetry between U.S. multinationals, which will be able to continue paying very little tax in certain countries without others claiming the difference, and everyone else. Not to mention the administrative complexity of the mechanisms devised under the OECD’s auspices.
One question remains: how did Donald Trump manage to play this joker—this exemption—without provoking more than a few ritual expressions of outrage, even from China?
To understand what tipped the scales, one has to go back to the summer of 2025, beyond the sheer audacity and force of character of the U.S. president. At the time, the European Union—more specifically Ursula von der Leyen, the European Commission president—had embarked on direct talks with Trump on tariffs between the two blocs, bypassing the EU Council’s negotiation mandate. L’Éclaireur covered this at the time:
Trump was threatening the EU with tariffs of 30%, even 50%, before conceding a 15% rate on most European exports—a result hailed as a victory by the Commission president, despite the lack of full reciprocity and the fact that tariffs had previously stood at 5%.
This was far from the only trade negotiation conducted under pressure from the U.S. president. Shortly before, the United Kingdom had secured a 10% rate, but only after repeated threats of tariffs rising to 25% or even 50% on sensitive sectors. Japan followed a similar path, eventually obtaining a reduced base rate of 15% instead of the 25% initially looming. South Korea faced the same strategy.
With Vietnam, Indonesia, the Philippines and Pakistan, several framework agreements announced over the summer were concluded with more moderate tariffs than those initially brandished. With China, following tariff escalation and threats of rupture, the truce that began last summer was extended into 2026.
All of this unfolded while U.S. exemptions from the global minimum tax were being negotiated in parallel.
It is hard not to see a connection. Hard not to think that tariff pressure influenced—and interfered with—the other standoff playing out at the OECD, which initiated the global minimum tax, and on the U.S. domestic political stage. A reminder: a Republican-controlled Congress had no appetite for a global minimum tax as negotiated under the Biden administration. And its support for Trump has weakened as the prospect of November 2026 midterms—less favourable to the current White House occupant and congressional Republicans—comes into view.
So was “global agreement” sacrificed on the altar of tax justice, while U.S. sovereignty was consecrated? In this game, the United States emerges the clear winner—on both fronts.
Others have not done so badly either. Countries with attractive tax regimes such as Ireland, Luxembourg, the Netherlands, Belgium or Singapore, which have implemented a QDMTT allowing them to retain the top-up tax without raising their effective rates, gain in reputational terms. They can claim to have applied the global minimum tax and can no longer be accused of tax dumping—while continuing to benefit from the very tax competition they help sustain. There is no reason for the GAFAM giants not to keep doing business there.
A paradox for a scheme that promised to transform global taxation and curb the race to tax optimisation—and which critics see as nothing more than an accounting illusion.
But could it have been otherwise? The dice were loaded from the start.
Well below the global average corporate tax rate of 25%, the 15% minimum is not a binding floor. In practice, it even acts as a “legal ceiling” for some multinationals, rather than a genuine anti-dumping threshold. We said as much back in 2021.
“This G7 agreement serves only to protect the interests of U.S. multinationals, led by the GAFAM, by imposing not a minimum but a de facto maximum rate, significantly reducing states’ autonomy to pursue sovereign tax policies tailored to their economic structure and development goals. This fake minimum rate will create enormous downward pressure on corporate tax rates within the EU and shift the tax burden onto individuals,” we wrote.
Not to mention the “qualified” exemptions and tax credits—for patents, R&D, investment, special zones and more—which drastically reduce the real effective tax rate of some multinationals, sometimes well below 15%. This in turn reduces the expected yield for host states, including France.
According to a report annexed to France’s 2026 draft finance bill, revenues from the global minimum tax are expected to amount to €500 million—down from an estimated €1.5 billion in 2024, three times as much—and this does not even factor in the U.S. exemption.