G7 Backs Plan for ‘Side-by-Side’ Tax System to Avoid U.S. Fight

The Group of 7 nations will say in a joint statement on Friday that the group has agreed to exclude American companies from penalties related to enforcement of a global minimum tax and move forward with “side-by-side” tax systems, according to a draft reviewed by The New York Times.

The agreement follows months of negotiations between the Trump administration and its counterparts about taxes that the U.S. finds to be discriminatory. The agreement should ease concerns among multinational corporations about the potential for a global tax war. To ease the deal, the Trump administration agreed this week to drop its support of a so-called “revenge tax” that Congress was considering in response to international efforts to raise taxes on American businesses.

“Delivery of a side-by-side system will facilitate further progress to stabilize the international tax system, including a constructive dialogue on the taxation of the digital economy and on preserving the tax sovereignty of all countries,” the G7 said in the draft statement.

The statement is expected to be released later on Friday. The Treasury Department did not immediately respond to a request for comment.

The announcement came a day after Treasury Secretary Scott Bessent announced on social media that the Trump administration was directing Republicans in Congress to drop the revenge tax proposal.

The measure, which faced strong opposition from corporate lobbyists, could have increased tax rates on foreign companies by as much as 20 percentage points over time if their headquarters were in “discriminatory foreign countries” with “unfair foreign taxes.” Business groups warned that the tax, which was estimated to cost companies more than $50 billion over a decade, would have scared off foreign investment and led to job cuts.