- The Chancellor and G7 plot path forward on global minimum tax and tackling of aggressive tax planning and avoidance.
- UK businesses spared from higher taxes after removal of Section 899 from the One Big Beautiful Bill.
- Chancellor acted swiftly on concerns about those potential impacts by committing to work with international partners to find a negotiated solution.
UK businesses will benefit from greater certainty and stability as the UK reached a common understanding with G7 partners on international tax rules.
The agreement addresses how the US and global minimum tax rules will interact with a view to supporting the common objective of tackling multinational tax avoidance and creating a more stable international tax system.
The agreement has helped secure the removal of Section 899 from the One Big Beautiful Bill which could have led to substantial additional tax on UK business.
Talks to address US concerns on the global minimum tax can now continue without the backdrop of this new retaliation measure.
The removal of section 899 follows UK businesses having voiced significant concerns to the Chancellor in recent weeks. Rachel Reeves committed to work with international partners to find a solution and has raised business concerns in her recent engagement with US Secretary to the Treasury Scott Bessent.
Today’s statement will support the stability required for businesses to have confidence to invest in the UK and create jobs, as part of the government’s Plan for Change.
It follows the Prime Minister’s launch of the Trade Strategy this week which set out Britain’s trade priorities with a mission to open more doors for business and deliver growth, and recent trade deals with India, the EU and the US.
Chancellor of the Exchequer Rachel Reeves said:
“I will always represent the best interests of British businesses on the world stage. Today’s agreement provides much-needed certainty and stability for those businesses after they had raised their concerns.
“The G7 agrees there is work to be done in tackling aggressive tax planning and avoidance and ensuring a level-playing field. The right environment for this work to happen is without the prospect of retaliatory taxation hanging over these talks, so the removal of Section 899 is welcome.”
The G7 have reached agreement on a path forward for the global minimum tax and Pillar 2 of the G20 / OECD Inclusive Framework project on Base Erosion and Profit Shifting.
The agreement seeks to maintain the core objectives of Pillar 2 – combatting multinational tax avoidance—while promoting a stable global tax environment that supports fair competition. Recent discussions have considered U.S. Treasury concerns with the application of the rules alongside the U.S minimum tax system.
G7 partners have reached an understanding on a possible solution that would allow the US minimum tax system to operate alongside the Pillar 2 rules but take steps to ensure any substantial risks with respect to the level playing field or base erosion and profit shifting are addressed.
The G7 will now discuss and develop this understanding, and the principles upon which it is based, within the Inclusive Framework of over 140 countries and jurisdictions, while making clear that the removal of proposed retaliatory tax measures in U.S. legislation is essential for this further progress to be made.
Through engaging in constructive discussions on the global minimum tax, the Chancellor is preserving its objective to target multinational tax avoidance while protecting the stability of the international tax system for British business.
The UK government will continue business engagement and work with international partners to develop the proposal agreed by the G7.
Rain Newton-Smith, Chief Executive, CBI, said:
“The US commitment to drop retaliatory tax measures proposed in the One Big Beautiful Bill removes a major source of uncertainty for UK-headquartered multinationals. The CBI has been clear – there are no winners in an economic standoff. Avoiding disruption to transatlantic investment, financial flows and jobs benefits both the US and UK economies.
“While uncertainty remains around the Bill’s final passage and other potential Congressional actions later down the line alongside the UK’s Digital Services Tax under scrutiny – the UK government has rightly defended British business interests and our national sovereignty. HM Treasury’s handling of a challenging negotiation process stands out for its openness and sustained engagement with industry.
“Looking ahead, global tax rules must now be rebalanced through multilateral agreement while ensuring UK companies remain competitively positioned. This is a pivotal opportunity for the OECD to deliver a genuinely simpler, fairer regime – one that goes much further in reducing excessive compliance burdens and upholds a level playing field for all.”
ENDS
Notes to Editors
- Link to G7 statement:link text
- The G7 is made up of Canada (president), UK, USA, France, Italy, Germany and Japan.
- Pillar 2 – the global minimum tax – is part of the OECD’s Base Erosion and Profit Sharing (BEPS) initiative to tackle multinational global tax avoidance through a global minimum 15% effective rate of tax.
- The OECD/G20 Inclusive Framework that will take forward the talks is a group of over 140 countries and jurisdictions.
