FIGURE 1: Overall implementation by bloc
framework, shielding US-parented multinational corporations from core anti-base erosion rules and, therefore, taxation on their domestic and foreign profits. As subsequently envisaged by the OECD, the US safe harbour will coex- ist alongside the agreed-upon Pillar 2 framework. This American exception was brokered because of a US presiden- tial directive on the G20-OECD tax deal issued in January 2025, in which the Trump administration declared it would have “no force or effect”. The zero-sum distributional implica- tions of this shift came into stark relief following the 2025 Kananaskis Summit. The European Union criticised the Cana- dian government’s role in brokering the safe harbour. During negotiations over the SbS framework, China, Poland and the Czech Republic raised objections about their non-eligibility for the carve-out, and Estonia raised competitiveness concerns. These developments signal a growing fragmentation of the international cor- porate tax consensus and undermine the integrity of the two-pillar agreement, raising ongoing risks of universal imple- mentation failure. Pillar 2’s global implementation record since 2023 has also been mixed (see Figure). Among G7 countries, all but the United States have implemented all three Pillar 2 instruments: the income inclusion rule, undertaxed profits rule and qualified domestic minimum top-up taxes. Within the European Union, 81% of members have fully implemented all three rules, and 85% have implemented at least one. This compares to full implementation at 56% among G20 countries, with partial implementation tracking higher at 67%. Full implementation in the OECD club stands at 68%, with partial implemen- tation sitting at 79%. These statistics illustrate a North-South divide, with 65% of non-OECD jurisdictions having not taken meaningful steps to implement any Pillar 2 rules. Overall, more than 60 juris- dictions worldwide have implemented or committed to Pillar 2. RESETTING THE SYSTEM At this vital crossroads, G7 leaders must take the following concrete measures to salvage the global minimum tax regime and revive the multi-billion-dollar fight against corporate tax avoidance. First, leaders should lock in what sta-
86%
14%
56%
11%
4% 33%
81%
15%
68%
11%
21%
8%
27%
65%
“Decision-makers must ask themselves whether the G7 will defend what remains and help underwrite the future integrity of the global corporate tax system” bility remains. They should commit to a side-by-side architecture that recog- nises the equivalency of US tax treatment of foreign corporate income, and secure US forbearance on reviving or activating retaliatory taxes. Second, the G7 should defend a level playing field and ensure there is periodic review to make sure US effective tax rates do not diverge materially from Pillar 2. Third, leaders should settle digital taxation issues and create a successor framework now that Pillar 1 has effec- tively been shelved. Fourth, the G7 should commit to deeper engagement with the United Nations and the OECD, and reform governance of the BEPS Inclusive Framework to ensure greater inclu- sivity in decision-making and global implementation. Finally, it is incumbent upon the G7 to invest resources in technical assistance in the Global South to ensure worldwide adoption remains viable. History will not judge the G7 by what it preserved in 2025, but by what it builds in 2026.
// MICHAEL MOTALA Michael Motala is director of taxa- tion with the G7 and G20 Research Groups and an assistant professor of law and political science at the Uni- versity of Tulsa College of Law. He recently authored Global Corporate Tax Governance: Crisis, Consensus, Revolution, published by Routledge in 2026.
X-TWITTER @michaelmotala
43 globalgovernancemedia.org
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