Trump’s Exit from Multilateralism – The End of the Global Minimum Tax?

On 20 February 2025, MannheimTaxation hosted a #ZEWLive webinar on the global minimum tax, focusing on the implications of the US rejection of the OECD-led initiative. More than 130 participants joined the discussion to explore its impact on global tax cooperation, the EU’s position, and whether the minimum tax puts European companies at a competitive disadvantage.

The panel consisted of Prof. Christoph Spengel (University of Mannheim), Dr. Katharina Nicolay (ZEW Mannheim) and Sean Bray(Tax Foundation Europe), with Prof. Philipp Dörrenberg (University of Mannheim) moderating the discussion.

Christoph Spengel opened with an introduction to the background and development of the global minimum tax. Originally, the measure was designed to curb tax avoidance through profit shifting by multinational corporations. However, he criticized that early estimates of tax gaps were significantly overstated, distorting the political debate. He also pointed out that the administrative costs of implementing the minimum tax are likely to exceed the actual revenue gains, raising doubts about its economic benefits.

Katharina Nicolay provided a closer look into the structure and mechanisms of the global minimum tax and how it has been implemented so far. While 137 countries initially supported the initiative, only a fraction – primarily EU member states – have implemented it so far. Major economies such as the United States, China, and India remain outside the framework, creating competitive disadvantages for European companies. This uneven adaptation not only increases tax burdens for firms operating in the EU but also incentivizes corporate restructuring to avoid the minimum tax.

Finally, Sean Bray shared insights into the U.S. perspective on the global minimum tax. He noted that even before Donald Trump took office, there was not enough support in Congress to pass the measure. One key reason is that the U.S. already had its own version of a minimum tax, known as GILTI, which not only operates differently from the OECD model but also generates higher tax revenues for the U.S. government. Additionally, elements of the global minimum tax conflicted with existing U.S. tax law, making its adoption politically and legally difficult.

Could the global minimum tax now be reversed? Spengel considers this unlikely, as it has already been implemented into EU law. However, if it becomes evident in the long run that the tax weakens the EU’s competitiveness, especially if other major economies do not adopt similar measures, political pressure for reforms could emerge.