The OECD’s 15% Global Minimum Tax: What It Is, How It Works, and Why the United States Is Excluded

Table of Contents

• What is the OECD’s 15% global minimum tax?
• Pillar Two and International Tax Reform
• Which companies are affected by the global minimum tax?
• Why the United States Does Not Fully Implement the Global Minimum Tax
• Impact of the Global Minimum Tax on Multinational Corporations (2025–2027)
• Is the global minimum tax target being met?
• Frequently Asked Questions About the Global Minimum Tax

The 15% global minimum tax is an agreement spearheaded by the OECD and the G20 to ensure that large multinational corporations pay at least that percentage in each jurisdiction where they operate. Its goal is to curb corporate tax avoidance and a race to the bottom in taxation, although its practical implementation is evolving at different rates across countries.

Summary

• It is a minimum tax of 15% per jurisdiction
• Applies to multinational companies with revenue exceeding 750 million euros
• It is part of Pillar Two of the international tax reform
• It aims to curb corporate tax avoidance
• The United States has a functional exception under the GILTI regime
• The critical implementation period is 2025–2027

What is the OECD’s 15% global minimum tax?

The global minimum tax is an international standard agreed upon in 2021 by more than 130 countries and jurisdictions that establishes a minimum effective tax rate of 15% per country for multinational groups with consolidated revenue exceeding 750 million euros.

The measure is part of a broader reform of the international tax system and aims to prevent large companies from artificially reducing their tax burden by shifting profits to low-tax jurisdictions. Instead of setting a nominal rate, the system is based on the actual effective rate paid in each country.

Pillar Two and International Tax Reform

The global minimum tax is at the heart of what is known as Pillar Two, one of the two main pillars of the international tax reform promoted by the OECD as part of the BEPS project.

While Pillar One focuses on the reallocation of taxing rights in the digital economy, Pillar Two introduces a global minimum tax rate, strengthening international tax cooperation and limiting competition among countries based on aggressive tax incentives.

Which companies are affected by the global minimum tax?

The global minimum tax applies to:

• Multinational Groups
• With consolidated revenue exceeding 750 million euros
• Regardless of the economic sector
• And the country where they are headquartered

The minimum tax is assessed on a jurisdiction-by-jurisdiction basis, which means that a company may meet the minimum rate in one country but not in another, triggering corrective mechanisms.

Why the United States Does Not Fully Implement the Global Minimum Tax

One of the most significant aspects of the current framework is the differentiated treatment of the United States. The OECD has formally recognized the U.S. tax regime known as GILTI (Global Intangible Low-Taxed Income) as a “qualified parallel regime.”

This recognition means that multinational corporations headquartered in the United States are not required to fully implement the Pillar Two rules, as it is considered that their national system already serves a function equivalent to a minimum tax, albeit under different technical rules.

In practice, this creates the risk of a two-tier international tax system, in which U.S. multinationals could operate under a different framework than other multinational groups.

Impact of the Global Minimum Tax on Multinational Corporations (2025–2027)

The period from 2025 to 2027 will be critical for the effective implementation of the global minimum tax. During this phase, companies will need to assess:

• The impact on its overall effective tax rate
• Interaction with Existing Tax Incentives
• Adapting Reporting and Internal Control Systems
• Implications for Tax and Financial Planning
• Decisions on the Location of Investments and Profits

In addition, the framework includes technical simplifications to reduce the administrative burden, although the level of complexity will remain high for groups operating in multiple jurisdictions.

Is the global minimum tax target being met?

One of the central objectives of Pillar Two is to ensure a level playing field among jurisdictions. However, the existence of national regimes recognized as equivalent raises reasonable doubts as to whether true global tax harmonization will be achieved.

The OECD has noted that the current agreement serves as a framework, and that it will be the technical implementation of its various components that determines whether the safeguards preserve or erode the principle of a level playing field among countries.

Frequently Asked Questions About the Global Minimum Tax

In an environment of regulatory transition and increasing tax scrutiny, the ability to anticipate scenarios and adapt tax planning will be crucial to maintaining competitiveness and avoiding unexpected risks.