Policy in practice: US tax reform – unpacking Trump’s tax plans

In the latest episode of our policy in practice podcast, David Gauke, Rhiannon Kinghall Were, and Bezhan Salehy discuss President Trump's decision to withdraw the US from the OECD global tax deal, the implications for Pillars 1 and 2, and the potential for future negotiations.

They cover:

• the background and details of the OECD global tax deal;
• the US' objections to Pillar 1 and Pillar 2;
• digital services taxes (DSTs); and
• political, fiscal and practical implications, including the likelihood of retaliatory measures and the impact on global trade and tax policy.

If you would like more information or want to discuss any of the topics in this podcast, please get in touch with David, Rhiannon or Bezhan.

Summary

In this latest policy in practice podcast episode, David Gauke, head of public policy at Macfarlanes, is joined by Rhiannon Kinghall Were, head of tax policy, and Bezhan Salehy, tax policy specialist, to discuss President Trump's announcement to withdraw the US from the OECD global tax deal and its potential ramifications.

The conversation begins by outlining the key elements of the OECD tax reform, particularly Pillars 1 and 2, which were aimed to address issues such as the taxation of tech companies, and introduce a global minimum tax. Rhiannon explains the US' objections, focusing on the impact of digital services taxes (DSTs) and the under-taxed profit rule in Pillar 2.

The conversation moves to the potential implications for US businesses, including the prospect of retaliatory measures from the US, such as tariffs, and how this could influence global trade and tax policies. Bezhan highlights the likelihood of countries continuing with Pillar 2 despite US objections, and the ongoing debates surrounding Pillar 1.

Lastly, they discuss the challenges ahead for governments and businesses in navigating the evolving global tax landscape, with a focus on the future of Pillar 2, the persistence of DSTs, and the uncertainty surrounding future tax compliance and negotiations.