New Delhi [India], June 29 (ANI): US-parented companies will be exempted from certain elements of an existing global tax agreement according to a statement released by the Group of Seven countires which detailed the new proposal signed by the United States and its G7 partners.

The agreement will see US companies benefit from a 'side-by-side' solution under which they will only be taxed at home, on both domestic and foreign profits, the G-7 said, in a statement released by Canada, which holds the group's rotating presidency.

Earlier this year the US Secretary of the Treasury outlined the United States' concerns regarding the Pillar 2 rules agreed by the OECD/G20 Inclusive Framework on BEPS and set out a proposed 'side-by-side' solution under which US parented groups would be exempt from the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) in recognition of the existing US minimum tax rules to which they are subject.

The side-by-side system could 'provide greater stability and certainty in the international tax system moving forward, including a constructive dialogue on the taxation of the digital economy and on preserving the tax sovereignty of all countries, the statement read.

The US Treasury Department noted that with Section 899 removed from the Senate version of the bill, there is now a shared understanding that the side-by-side system could help maintain progress made by jurisdictions within the Inclusive Framework in combating base erosion and profit shifting.

'Following the removal of section 899 from the Senate version of the One, Big, Beautiful Bill, and consideration of the success of Qualified Domestic Minimum Top-up Tax implementation and its impact - there is a shared understanding that a side-by-side system could preserve important gains made by jurisdictions inside the Inclusive Framework in tackling base erosion and profit shifting and provide greater stability and certainty in the international tax system moving forward, the G7 announced. We look forward to discussing and developing this understanding within the Inclusive Framework,' the Treasury said in a post on X.

The removal of Section 899 has also been welcomed by the United Kingdom.

British businesses, which had recently voiced concerns about potentially facing higher taxes due to the measure, will no longer be subject to those risks.

G7 officials echoed the importance of collaboration, expressing their commitment to pursuing a solution that is 'acceptable and implementable to all.'

Earlier this year, through an executive order, Donald Trump declared that the 2021 global corporate minimum tax agreement--negotiated by the Biden administration and supported by nearly 140 countries--would not apply in the United States.

He also threatened to impose a retaliatory tax on nations implementing the global tax rules against US firms, a move viewed as harmful to many foreign companies operating within the US. (ANI)