US Withdrawal from Global Tax Deal: Implications for India and Beyond

The Trump administration's decision to withdraw from the OECD's global tax deal impacts global consensus and international tax regulation efforts. However, India remains unaffected in tax collection, aligning with its 'wait and watch' policy. This move stalls advancements in establishing a 15% global minimum tax.

The Trump administration's unexpected withdrawal from the OECD's global tax deal has sent shockwaves through the international tax community. Experts argue that while India remains largely insulated from immediate tax collection impacts due to its cautious approach, the move jeopardizes global efforts to establish a consensus on combating tax avoidance.

US President Donald Trump officially denounced the Global Tax Deal in a presidential memorandum, declaring it void within the US. This action challenges the Organisation for Economic Co-operation and Development's initiative to unite 140 countries under rules enforcing a global minimum corporate tax rate of 15 per cent.

Rakesh Nangia of Nangia & Co LLP emphasizes that the shake-up will force many jurisdictions, which have adopted the GloBE rules, into strategic pivots. Meanwhile, tax expert Yeeshu Sehgal highlights the US's apprehensions about potential double taxation for American companies under the new regime. As India observes these developments, the OECD might be compelled to rethink its tax strategy.

(With inputs from agencies.)