Claire Healy, Tax Partner, Forvis Mazars : The recent decision by the United States to withdraw from the ‘Global Tax Deal’ has raised questions about the future of international tax reform. Despite this setback, the European Union (EU) and other jurisdictions committed to the deal are likely to continue driving the project forward.

One of the key aspects of the Global Tax Deal is its extraterritorial nature. This means that the rules can apply to multinational corporations regardless of where they are headquartered. Advocates for global tax reform argue that the success of the project does not hinge on US participation. The EU and other adopting jurisdictions can implement the rules and enforce them on companies operating within their borders, ensuring that these corporations pay their fair share of taxes.

If the US remains outside the Global Tax Deal, it could miss out on valuable tax revenue that would instead flow to the EU and other jurisdictions. This scenario might prompt the US to reconsider its stance. One possible approach could be expanding its current minimum tax regime, known as the Global Intangible Low-Taxed Income (GILTI) tax, to cover additional sources of income. By doing so, the US could effectively align with the principles of the Global Tax Deal without formally rejoining it.

Peter Reilly, Tax Policy Leader, PwC Ireland: It is arguable that the United States was never fully in the ‘Global Tax Deal’ to begin with. Pillar One, with the so-called Amount A which focuses on the creation of new taxing rules for market countries (i.e. where customers and users are based) on some of the world’s largest MNEs, was already facing significant challenges with respect to being implemented on a global basis even before the new US Administration entered office, and in particular was never likely to be implemented by the United States (except perhaps Amount B to a limited extent).

With respect to Pillar Two, the US was always going to have an uphill battle with implementation given the political divide between the executive and legislative branches of the government during the last administration. Furthermore, the United States already had GILTI in place which has similarities to the Pillar Two IIR (and indeed was the precursor to the IIR).

Nevertheless, the United States’ refusal to sign onto the Global Tax Deal does not stop other countries from going ahead with its implementation, bearing in mind that over 50 countries globally have already embedded some form of Pillar Two legislation in their domestic laws, with dozens more in progress. Whilst the Pillar Two train has already left the station (leaving Pillar One’s Amount A behind, which has been stalled for years now), the new US Administration’s publicly expressed intentions through its Executive Orders will inevitably impact, and potentially modify, the direction of travel this train takes.

Finally, it is also worth noting that the BEPS project comprises more than just the Two-Pillar solution. The OECD BEPS Inclusive Framework continues to work on other international tax topics of import including tax certainty, transfer pricing, tax transparency, tax and inequality, tax and development, and digital transformation. These other components of the BEPS project continue to forge ahead as outlined in the recent OECD Secretary-General Tax Report to G20 Finance Ministers, which shows that other aspects of the BEPS project remain business-as-usual.

This article appeared in the March 2025 edition of the Irish Tax Monitor.