US Treasury comes under fire over OECD tax talks

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

US Treasury comes under fire over OECD tax talks

Congress will make or break Biden’s tax plan

US lawmakers criticised the OECD plans for a minimum corporate tax rate and new taxing rights under the two-pillar solution, with one saying they make ‘no sense’.

The House Ways & Means Committee singled out the OECD proposals to reform international tax rules in a hearing last week on July 19, slamming the US Treasury negotiations in particular.

Michael Plowgian, deputy assistant secretary for international tax affairs at the Treasury, faced tough questions from the committee about the undertaxed payments rule (UTPR).

Ways & Means Committee Chairman Jason Smith asked: “Was Congress consulted prior to Treasury agreeing to a UTPR surtax that would allow foreign governments to tax the US operations of US companies?”

In response, Plowgian said the Treasury did receive input from Congress on the UTPR during the negotiations.

But Smith said he disagreed: “I have followed this issue very closely over the past three years, and I don’t think that’s the case. I know that Treasury has never consulted with Republican members prior to a decision.”

The UTPR is a key part of the global anti-base erosion rules to establish a global minimum corporate tax system under the two-pillar solution. Even though the US has minimum corporate tax rates in place, the country has not enacted pillar two so far.

Tax surrender

The hearing did not get any easier for Plowgian as Pennsylvania Representative Mike Kelly, who chairs the Ways & Means Sub-committee on Tax, criticised the agreement for its cost to the US.

“It’s $120 billion in US tax revenues to foreign countries. This makes absolutely no sense,” said Kelly.

The Republican congressman went on to claim that the OECD tax work is effectively controlled by Europe.

“Europe controls one third of the seats on the Steering Committee, and the broader Inclusive Framework includes over 30 tiny former European colonies,” said Kelly.

“The bottom line is the deck is stacked against America at the OECD,” he argued. “That is why it has never made sense for Treasury to negotiate behind closed doors with a group of 140 nations on a ‘one-country, one-vote’ basis.”

Plowgian stressed that pillar two is about levelling the playing field for US companies, but this did not convince Republicans on the committee.

Georgia Representative Drew Ferguson said: “We are not about levelling the playing field with the rest of the world. We’re about being number one day in and day out.

“We’re either going to be number one in the world or we’re not,” he added.

Many tax experts are increasingly concerned that US politics could derail the OECD’s efforts to secure a multilateral agreement on tax reform. If the two-pillar solution fails, US companies may have to live with the threat of unilateral taxes in Europe and elsewhere.

The hearing came at a critical time for the OECD’s work on pillar one, the other part of the solution. The Paris-based organisation hopes to settle the technical aspects of new taxing rights and profit allocation rules to finalise an agreement by the end of the year.

more across site & shared bottom lb ros

More from across our site

Software company Oracle has won the right to have its A$250m dispute with the ATO stayed, paving the way for a mutual agreement procedure
If the US doesn't participate in pillar two then global consensus on the project can’t be a reality, tax academic René Matteotti also suggests
If it gets pillar two right, India may be the ideal country that finds a balance between its global commitments and its national interests, Sameer Sharma argues
As World Tax unveils its much-anticipated rankings for 2026, we focus on EMEA’s top performers in the first of three regional analyses
Firms are spending serious money to expand their tax advisory practices internationally – this proves that the tax practice is no mere sideshow
The controversial deal would ‘preserve the gains achieved under pillar two’, the OECD said; in other news, HMRC outlined its approach to dealing with ‘harmful’ tax advisers
Former EY and Deloitte tax specialists will staff the new operation, which provides the firm with new offices in Tokyo and Osaka
TP is a growing priority for West and Central African tax authorities, writes Winnie Maliko, but enforcement remains inconsistent, and data limitations persist
The UK tax agency has appointed six independent industry specialists to the panel
The two tax partners have significant experience and expertise in transactional and tax structuring matters
Gift this article