When US President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law in July, he set in stone tax provisions that will shape the US multinational corporate landscape for years to come.

The international provisions in President Trump’s budget and tax plan are an ‘America First’ policy that favours US-based multinationals and diverges from an OECD global tax fairness framework.

Joseph Sullivan, an officer of the IBA Taxes Committee, says the OBBBA’s most enduring impact lies in its corporate and international tax architecture. The US has solidified its international tax regime in two key respects, he explains. ‘One, to provide for current taxation of all subsidiaries, which on a standalone basis makes it relatively unattractive to be a US multinational’, he says, because such a cost is one ‘you might not bear in some other countries.’ 

Secondly, the OBBBA has extended the foreign-derived intangible income (FDII) regime, ‘which in very broad terms is an export incentive,’ explains Sullivan. FDII offers a preferential tax rate for income from exporting goods and services, or licensing intellectual property abroad. Under the new law, the FDII deduction is set at 33.34 per cent, producing an effective tax rate of roughly 14 per cent from 2026, according to the accounting company Ernst & Young. The OBBBA applies a similar effective rate to global intangible low-taxed income (GILTI), maintaining parallel treatment of foreign and export income.

The retention of low rates and more generous foreign tax credit rules help keep the US regime competitive for multinational companies with global operations and significant overseas profits, says Sullivan, who’s a lawyer at Covington & Burling in Washington, DC. ‘It provides a reduced rate of tax to people who sell goods or services to foreigners, basically. And so that piece of the Act makes it good to be a US multinational, because you are able to take advantage of that deduction. So, it solidified that regime.’ Sullivan adds that some companies benefit from those rules and ‘come out ahead’, while others don’t. 

Importantly, the new law codifies the unilateral approach taken by the US to corporate and international tax, which diverges from the global minimum tax framework being developed by the OECD. Most other major economies are moving toward a 15 per cent minimum tax to discourage profit-shifting to tax havens. ‘One interesting additional flavour here is that the US had been negotiating with the OECD on the implementation of a 15 per cent worldwide, global minimum tax. What the US did in making its 2017 [tax cuts] law permanent and not adopting the OECD global minimum tax is very interesting, because it basically means we will continue to do it our way,’ Sullivan says. 

‘And that has been accompanied by a number of other interesting developments that have caused the US to be in some conflicts with countries adopting the global minimum tax. That is leading to a bunch of negotiations on the world stage as to how that tax should proceed, how it should affect US companies,’ adds Sullivan.

While the new US law is technically compliant with OECD standards, the divergence risks prolonged disputes over double taxation, foreign tax credits and retaliatory measures, particularly as more nations implement the OECD’s ‘Pillar Two’ rules that the US won’t mirror, Sullivan says.

In June, US Treasury Secretary Scott Bessent negotiated a compromise with delegates from several major economies during the G7 Summit in Canada. They agreed a ‘side-by-side’ system to exempt US companies from OECD rules. In exchange, the Trump administration withdrew a ‘revenge tax’ provision from the OBBBA that would have targeted non-US companies.

OECD Secretary-General Mathias Cormann welcomed the G7 agreement as ‘an important milestone’ and pledged that his organisation would continue to negotiate toward ‘the original aim of establishing multilaterally agreed limitations on corporate tax competition and also safeguards the tax bases of governments.’

Additionally, the OBBBA allows businesses to deduct the full cost of assets acquired beginning in 2025, instead of depreciating them over multiple years. It liberalises business interest deductions and expensing for domestic research and development investments.

The Act terminates and phases out a wide range of green energy tax credits enacted under former President Joe Biden.

Opponents have argued that President Trump’s rollbacks of health and social safety net programmes will disproportionately harm children, the elderly, low-income families and people with disabilities. Most of the tax cuts will accrue to wealthy individuals and corporations while average working families will see little gain, opponents of the OBBBA claim. The additional deficits will push up US interest rates, they say.

‘Budgets reflect the policy. [The OBBBA] cuts funding for certain entities that the administration views as not consistent with its policy priorities,’ says Steven Richman, Chair of the IBA Bar Issues Commission.

Supporters of the OBBBA counter that investment incentives and a lower tax burden on overseas profits will spur growth, expand the tax base and partially offset the projected revenue losses over time.

The overall fiscal impact will probably be stimulative for the US economy. ‘It spends more than it raises, and that – by any Keynesian economist’s definition of how tax works – will be stimulative,’ Sullivan says.

‘Overall, [the] OBBBA will modestly boost the economy in the short run, offsetting a small portion of the revenue cost. But the Act will worsen the nation’s already daunting long-term budgetary imbalance,’ wrote Benjamin Page, a senior fellow at think tank the Urban-Brookings Tax Policy Center.

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