The Tax Cuts and Jobs Act rewrote the rules of the game for US multinationals. When it passed in 2017, the TCJA was sold as a large-scale repatriation, a measure that would put a damper on profit shifting. Research by the International Tax Observatory and our own investigations at Democracy Challenged tell a different story. American MJGs never stopped shifting profits. What changed was the geography. The TCJA effectively turned the United States into one of the world’s biggest tax havens – for its own multinationals.
Trump’s second term has taken an equally aggressive approach, one that continues to undermine the tax sovereignty of other countries. In January 2026, the OECD published a statement deeming the US eligible as a side-by-side regime, effectively exempting it from its obligations under Pillar II, including the global minimum tax on corporate income. The US is currently the only country in the world granted such status. The consequences are far-reaching.
The extension of the status quo
The most immediate message is clear: this administration has no intention of holding its corporate superstars accountable for their incongruous tax practices. A growing body of empirical research and investigative reporting shows that the scale of profits shifted by US MJGs has continued to increase, even after the closure of major avoidance structures like the Double Irish.
And almost no country is spared. European economies alone lost an estimated $90 billion in corporate tax revenue between 2016 and 2021 to US MJGs (TJN). The picture is similar across other parts of the world.
US actions impede any prospect of retaliation. Through the threat of direct coercion (tariffs, most obviously), pushback is neutralised before it begins. And by acknowledging the exemption status of the US, the OECD has effectively stifled the possibility of collective bargaining. Under the current dispensation, the US is actively facilitating the erosion of fiscal sovereignty worldwide.
An attack on anti-avoidance measures, orchestrated by Big Tech?
This trend cannot be separated from the Winner-Takes-All capitalism that has come to define the United States in the 21st century. When people talk about tax-avoiding multinationals, they are primarily talking about Big Tech. The close ties between Silicon Valley CEOs and Donald Trump are no secret. He has flaunted them from day one.
The concentration of market power and profits in the hands of these corporate groups is symptomatic of the post-liberal market economy in the US. The focus on competition has been replaced by entrenched oligopolistic structures, reinforced by the vertical tightening of competition law and intellectual property monopolies. A particularly central component underpinning this “New Gilded Age” is the ability of MJGs to avoid taxes on a massive scale.
The failure to tax this latest generation of American MJGs appropriately has implications that go far beyond lost revenue. It highlights the inability of the state, in the US and beyond, to effectively counter corporate power. Without appropriate taxation, concentrated corporate power cannot be addressed. Regaining fiscal sovereignty should be a key objective not only for the US, but for every country losing out under the current arrangement.
What future for multilateralism?
On the international stage, the biggest wound is self-inflicted. The OECD’s January 2026 agreement represents a massive step backwards for over a decade of effort to combat base erosion and profit shifting. Efforts which, ironically, were at times strongly championed by the US itself. The exemption does not merely undermine the legitimacy of current regulations. It severely constrains the scope for future policy initiatives.
The OECD has lost a great deal of its authority in the field of international tax relations. The immediate question is whether it remains the right institution to lead on these issues. The answer, increasingly, is no. But the more fundamental question is what future remains for multilateral action at all. If the US faces no meaningful resistance and its MJGs are not held to account, this presents a political stress test for the entire global community.
That makes the call on governments worldwide all the more urgent: insist on tax sovereignty with greater determination than ever. Promote more transparent country-by-country reporting. Pursue a substance-based approach to corporate taxation. And, perhaps most importantly, re-establish a credible and legitimate forum in which supranational tax issues can be discussed and decided. Because the current one has failed the test.
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