Mark Taylor
Tax Director, Duncan and Toplis
Global tax and tariff challenges for multinationals
March 19, 2025
Global tax and tariff challenges for multinationals have been in the headlines, recently. Kreston Global Tax Group Chair, Mark Taylor, recently spoke to Taxation on the impact of changes in US policy on the global tax landscape.
The new Trump administration is creating global uncertainty with its impact on trade and tax policies. Specifically, two announcements have shaken the global tax landscape: the signing of a presidential memorandum regarding the OECD Global Tax Deal and changes in tariffs.
Impact of US withdrawal from OECD’s global minimum tax
The OECD’s global minimum tax (Pillar 2) aims to ensure large multinationals pay a 15% minimum tax rate. If the US pulls out of this agreement, several key rules will be jeopardised. These include the Undertaxed Profits Rule (UTPR) and Income Inclusion Rule (IIR), which could trigger tax disputes and complex compliance issues.
Potential global fragmentation
The US withdrawal may cause fragmentation in tax rules, increasing unilateral taxation and compliance costs. The possibility of more aggressive tax audits and stricter transfer pricing scrutiny also looms large. Multinational companies must review their intercompany pricing policies and supply chains in light of these uncertainties.
Global tax and tariff implications for multinationals
President Trump has imposed tariffs as a tool for boosting US manufacturing and reducing trade deficits. These tariffs could impact middle-market companies, particularly those reliant on imported components. Companies must reassess their supply chains, considering alternative suppliers and production locations, to stay competitive.
How the midmarket can tackle global tax and tariff challenges
Middle-market businesses must evaluate how tariffs affect production costs, pricing strategies, and supplier relationships. Diversifying supply chains and considering relocating production could help mitigate the risks posed by tariffs.
Transfer pricing and customs challenges
The intersection of transfer pricing and customs duties can create significant tax challenges. Companies should align their intercompany pricing policies with customs regulations to avoid disputes and penalties. The potential withdrawal of the US from Pillar 2 heightens the risk of more aggressive tax scrutiny.
Preparing for future global tax and tariff challenges
Multinational enterprises should adopt strategies to harmonise transfer pricing and customs valuations, reassess their supply chains, and prepare for potential global tax increases. Aligning pricing policies and taking advantage of customs deferral programmes will be crucial in managing costs.
For more insights, consult with tax professionals to evaluate your business’s exposure and compliance strategies.
