Donald Trump has threatened a tax war on US multinationals

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Donald Trump has ordered officials to retaliate against countries that impose taxes on US multinationals “out of bounds”.

The President of the United States took this step on Monday evening after the United States withdrew its support for an international tax treaty. OECD Last year, it allowed other countries to levy additional taxes on US multinationals.

He added that a “list of countermeasures” should be presented within 60 days, signaling that Washington is thinking far ahead of the OECD agreement’s signatories – including EU member states, the UK, South Korea, Japan and Canada – reaching challenges to international tax rules.

Trump In his first term as president, he clashed with European leaders over digital taxes that would affect big US tech groups such as Google owner Alphabet and Apple.

The order issued on Monday includes an investigation into “any foreign countries that do not comply with any tax treaty with the United States or have tax laws or laws that may be used to enforce tax laws that are extraterritorial or that disproportionately affect U.S. companies.”

Ali Rennison, a former UK trade department official who now advises SEC Newgate, said the move showed Trump was widening the net of “economic warfare” beyond tariffs in response to what the US sees as discriminatory practices from other countries. “His domestic tax regime behind international commitments in the past shows that Trump is getting creative in his fight to put ‘America First,'” she said.

“The net of economic warfare is ever-widening beyond tariffs, and as governments begin to consider their response, concerns now center on what might happen in a retaliatory dispute — and the inevitable costs that come with it.”

In the year The global agreement, agreed by the Paris-based OECD in 2021 and partly introduced by several countries last year, is expected to increase the tax collected from the world’s largest multinationals by up to 192 billion dollars a year.

According to the “Pillar Two” of the OECD agreement, signatories may charge additional fees in the country where the multinational is headquartered if corporate profits are taxed below 15 percent. But one piece of the measure, known as the Untaxed Profits Rule (UTPR), has long drawn Republicans. AngerWith the name “The Party”.BiasedHe said.

Grant Wardell-Johnson, head of tax policy at global accountants KPMG, said US responses could include imposing additional taxes on foreign businesses operating in the US or banning payments to those jurisdictions.

“Finally, we are seeing international taxation move from a multilateral domain to a bilateral one with strong unilateral guarantees. It is a new world of taxation,” he added.

Alex Cobham, chief executive of the Tax Justice Network, an international campaign group, said the implementation of Trump’s move would leave the OECD agreement “dead in the water”.

In a two-part memo to the U.S. Treasury secretary, Trump first ordered the Biden administration to cancel its commitment to the OECD agreement — a move that had been widely expected — but broadened the scope of the attack.

Cobham said the potential scope is not just the breach of the OECD’s tax treaties, but the potential extraterritoriality of all tax laws in all countries.

“If you take that statement at face value, they will come back within 60 days and say that most of the world and most of the OECD member countries have to take action on what they are saying.”

A senior EU official said Trump’s billionaire tech entrepreneurs are pushing him to act on taxes rather than trade. He added, “The discussion on tariffs will be transactional, but the real fight will be where resources are available and where there is a great need for technology.”

OECD Secretary-General Matthias Cormann said: “There were questions raised by the US representatives regarding various issues in our international tax treaty.”

The organization “will continue to work across the table with the United States and all countries to support international cooperation that promotes certainty, prevents double taxation and protects the tax base,” he said.

The European Commission says it has taken note of Trump’s presidential memo. “We will fulfill our international obligations from our side. . . And we are open to meaningful dialogue with our international partners,” the spokesperson said.

Additional reporting by Laura Dubois