Adam Kern (San Diego; Google Scholar), Does the U.S. Exception Threaten Pillar Two?, 188 Tax Notes Fed. 387 (July 21, 2025):
The G7’s proposal to recognize GILTI as a qualifying IIR [Income Inclusion Rule] is a milestone in the project of establishing a global minimum tax. If accepted, it would establish two minimum tax regimes: one for firms parented in the United States, another for firms parented in the rest of the world.
Nonetheless, this U.S. exception to pillar 2 will likely not prove fatal. The modest tax differentials between GILTI and pillar 2, political uncertainty about GILTI’s future trajectory, and the further constraint of the corporate AMT all limit the likelihood of a mass exodus of parent entities to the United States. Moreover, even if the U.S. minimum tax regime proves to be porous — and U.S. firms can shift profit effectively — one of its effects might be to increase the tax revenue collected by IIRs and UTPRs [Undertaxed Profits Rules].
Many questions remain. It is unknown whether the OECD will accept the U.S. exception and, if so, how that exception will be defined. Other countries might try to fit within the U.S. exception or seek their own. The “global” minimum tax, perhaps, might prove to be anything but.
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