India is questioning whether a global corporate tax deal can still work after the U.S. pulled out of the agreement.
According to Reuters, U.S. President Donald Trump recently declared that the 2021 global tax deal “has no force or effect” in the U.S., effectively walking away from it. This has left India and other countries wondering if the deal can succeed without U.S. participation.
The global tax deal, agreed to by 140 countries, was designed to ensure big companies pay a minimum tax rate of 15%. It aimed to stop countries from competing to lower corporate taxes and to make it harder for multinational companies to avoid paying taxes.
The deal was brokered by the Organisation for Economic Cooperation and Development (OECD) after years of negotiations.
Finance Secretary Tuhin Kanta Pandey told Reuters that India is now evaluating whether the deal can work without the U.S., especially since many major tech companies are based there. “It was a global thing, it can’t be unilateral,” Pandey said, emphasizing that the deal needs widespread support to be effective.
India has also raised concerns about the first part of the deal, which it has long disagreed with. Pandey said these issues, including how tax disputes are handled and the treatment of withholding taxes, have not been resolved. India is part of the second part of the deal but remains cautious about how it will move forward.
Reuters highlights that the U.S. withdrawal has created uncertainty for the global tax agreement. Without the U.S., which is home to many of the world’s largest companies, the deal’s effectiveness is in doubt.
India’s concerns reflect broader challenges in creating fair global tax rules, especially when major economies like the U.S. step back.
For now, India and other countries are left to figure out how to make the deal work in a changing global landscape.
Credit : Reuters