Global efforts to rein in tax avoidance by tech giants and the ultra-wealthy have hit a wall, with the United States under President Donald Trump halting progress on international tax reforms. The Trump administration has withdrawn from key global tax negotiations and threatened retaliatory tariffs against countries that attempt to impose levies on U.S.-based multinational corporations.
Several countries, including France, the UK, and others in the EU, have accused digital giants such as Amazon, Alphabet (Google), Microsoft, and Meta (Facebook) of avoiding local taxes through international loopholes. In response, some nations introduced digital services taxes (DST), targeting revenues generated within their borders. France’s DST, for example, generated €780 million ($887 million) last year.
In a memo dated February 21, Trump warned against “discriminatory” taxes aimed at U.S. firms, threatening tariffs and other retaliatory measures. This aggressive stance echoes a similar episode during his first term, when Trump threatened duties on French goods in response to their digital tax law.
The broader push for a global corporate tax structure, led by the Organisation for Economic Co-operation and Development (OECD), also faces setbacks. While nearly 140 countries agreed in 2021 on a two-pillar framework to address tax avoidance, implementation of the first pillar taxing profits in the countries where they’re earned has stalled. The second pillar, a minimum 15% corporate tax rate, has seen wider adoption, with support from over 60 nations.
Meanwhile, a Brazilian proposal for a two percent minimum tax on individuals with net assets exceeding $1 billion intended to generate up to $250 billion annually has met resistance from the United States. The Biden administration declined to back the initiative, and it’s unlikely to gain traction under a potential Trump return, given his tax-cutting ideology and billionaire status.
With nearly a third of the world’s billionaires residing in the U.S., experts like French economist Thomas Piketty argue that waiting for full G20 consensus may be futile. He urges individual nations to take the lead and set new international norms through unilateral action.
