Mint Explainer | What’s happening to the global minimum tax deal?

Subscribe to enjoy similar stories. NEW DELHI : NEW DELHI: The global agreement aimed at setting a minimum level of corporate taxation is facing fresh tests.

Earlier this month, the US secured a carveout from the Organisation of Economic Cooperation and Development (OECD)-backed global minimum tax framework, allowing its largest companies to rely on domestic tax rules instead of the proposed 15% minimum rate. The carveout, agreed under a framework endorsed by more than 140 countries, means Washington’s own tax rules will be treated as sufficient for US-based multinationals.

While the move does not undo the broader agreement, it has raised questions about consistency across countries and whether the global consensus against tax avoidance could weaken over time, reviving fears of a “race to the bottom" in corporate tax rates. Mint explains how the global tax deal works, why the US carveout has drawn attention, and what it could mean for India.

The OECD and G20 countries, including India, negotiated a new global tax architecture to curb base erosion and profit shifting (BEPS)—a practice where multinational corporations shift profits to low-tax jurisdictions with little or no real economic activity. An ‘inclusive framework’ was launched in 2016, and in 2021, over 140 countries agreed to a two-pillar solution to address tax challenges arising from digitalization and globalization.

Under pillar two, large multinational groups are subject to a 15% global minimum effective tax rate, implemented through coordinated domestic rules. Pillar one seeks to reallocate a portion of taxing rights to market jurisdictions such as India, where digital and consumer-facing companies earn revenues without significant physical presence.