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Where Does the U.S. Stand on Pillar Two?

6th April 2022

Will the U.S. adopt Pillar Two? That is what the world has been wondering since changes to the global intangible low-taxed income (GILTI) stalled in Congress last fall. And while late to the party perhaps, the U.S. seemingly supports the 15% global minimum tax, known as Pillar Two. In fact, the Treasury’s Green Book claims that it’s still a priority, which could come as a relief to countries around the world. A global minimum tax only works with global buy-in, as each country would have to adopt it into local legislation. Supporters like the UK and Switzerland have already launched public consultations to begin the process. And EU member states are set to vote again in May to make it a directive (though it failed to get the unanimous vote on the first two tries). The U.S. hasn’t been opposed—it addressed the proposal under the Build Back Better Act, recommending upping GILTI’s rate from 10.5% to 15% and also, switching from an aggregated to a country-by-country calculation. Both moves align with Pillar Two’s income inclusion rule, which allows countries to issue a top-up tax to local company headquarters that pay less than 15%. Of course, all came to a screeching halt when Build Back Better stalled in the Senate. So, for now, the U.S. treads familiar water—the White House advocates for legislation and then waits to see if Congress will finally pass it.