Daijiworld Media Network - Washington

Washington, Jun 29: In a move to prevent a global tax conflict, the United States and fellow G7 nations have agreed on a new framework to ease tensions over international corporate taxation. The deal introduces a ‘side-by-side’ system aimed at exempting US firms from certain provisions of a broader global tax pact.

A key element of the agreement was the US commitment to drop Section 899, a controversial measure from former President Donald Trump’s tax-cut bill. Nicknamed the “revenge tax,” the provision would have raised taxes on US income earned by foreign companies and individuals, particularly targeting nations seen as having discriminatory tax practices.

According to a joint G7 statement on Saturday, the side-by-side system is expected to bring “greater stability and certainty” to international tax rules. The G7 also pledged to back the US position in ongoing talks with the G20 and the OECD, where some digital tax proposals have met resistance from Washington.

The agreement does not fully resolve the contentious issue of digital services taxes, which several countries impose on American tech giants like Meta and Amazon. However, the G7 emphasized their commitment to engage in “constructive dialogue” on digital economy taxation while respecting national tax sovereignty.

US Treasury Secretary Scott Bessent confirmed that Section 899 was removed from the latest version of the One Big Beautiful Bill Act, following bipartisan agreement in the Senate. He noted that the removal was essential to achieving consensus among G7 members.

“The removal of Section 899 is crucial to this overall understanding and to providing a more stable environment for discussions to take place,” the G7 stated, highlighting its importance in advancing a more unified and fair global tax system.