How U.S. Business Tax Policy Aligns with OECD Pillar Two Goals—and What It Means for You
Key Takeaways:
The U.S. tax system already includes measures that address many of the global profit shifting concerns targeted by the OECD's Pillar Two framework.
American multinationals are less likely to see major tax disruptions under the proposed global minimum tax rules due to existing U.S. laws like GILTI.
Ongoing international negotiations see the U.S. playing a critical role in keeping the Pillar Two project focused and workable for businesses.
Businesses in the DMV area with international operations—or planning to expand abroad—must understand how these developments affect tax planning and compliance.
Estate planning, LLC structures, and choice-of-entity decisions may need to account for how global tax rules could evolve in the coming years.
The global business tax landscape is changing. The OECD's Pillar Two proposals, which aim to establish a global minimum tax rate of at least 15% for large multinational enterprises, are moving forward. But while much of the world is gearing up for a significant overhaul, the United States is already further down the road than many realize.
For business owners, executives, and advisors in the Maryland–Virginia–D.C. area, understanding how U.S. tax law fits into this global picture is essential. Whether your company operates overseas, is exploring international markets, or is preparing for long-term succession planning, these changes matter.
In this article, we'll break down what Pillar Two is, how the current U.S. system is already aligned with many of its goals, and what it all means for your business or personal planning tax planning.
What Is OECD Pillar Two—and Why Should You Care?
Pillar Two is part of a broader initiative by the Organization for Economic Co-operation and Development (OECD) intended to combat base erosion and profit shifting (BEPS). Specifically, it proposes a global minimum corporate tax rate of 15% to ensure that multinational companies pay a fair share of tax, regardless of where they operate.
The goal is to prevent companies from shifting profits to low-tax jurisdictions and undermining the tax bases of home and host countries alike.
Here's where the U.S. stands out: while it hasn't yet formally adopted Pillar Two, our system already incorporates many policies that reflect the same principles.
How U.S. Tax Rules Already Mirror Pillar Two Goals
One of the most significant elements of existing U.S. tax law is GILTI—the Global Intangible Low-Taxed Income regime. Introduced through the Tax Cuts and Jobs Act of 2017, GILTI was designed to discourage profit shifting by ensuring that U.S. shareholders of controlled foreign corporations pay a minimum level of tax on foreign income.
While Pillar Two sets a 15% minimum, GILTI also applies taxes to foreign income that falls below certain thresholds, although its calculation and application differ.
Similarly, the U.S. base erosion and anti-abuse tax (BEAT) targets certain deductible payments made by U.S. corporations to foreign affiliates, which could otherwise erode the U.S. tax base.
Taken together, these policies show that the U.S. hasn't been idle on international tax enforcement. In fact, U.S. business taxation already meets many of the foundational goals that Pillar Two attempts to globalize.
Strategic U.S. Positioning in Global Tax Talks
The United States isn't blocking Pillar Two. Quite the opposite: American officials have taken an active role in shaping its implementation, particularly by insisting on practical, business-friendly applications.
Some countries have floated overly aggressive interpretations or implementation timelines, which the U.S. has pushed back on. That's not obstructionism. In many cases, it's course correction—steering the initiative toward outcomes that are balanced and legally defensible.
That matters here in Maryland, Northern Virginia, and Washington D.C., where government contractors, tech startups, and family-owned export businesses all have potential exposure to international tax regimes.
By standing firm in negotiations, the U.S. helps ensure that American businesses won't be disproportionately burdened or pushed into unfavorable compliance corners.
What This Means for Regional Businesses and Investors
For businesses and high-net-worth individuals in the DC metro area, the practical impact of Pillar Two reforms may not be immediate, but they're worth planning for now. Here's how these developments could affect you.
1. International Expansion Plans
If you're planning to open offices or subsidiaries abroad, understand that local taxation may shift to reflect global standards. Previously attractive low-tax jurisdictions may lose their edge as national governments implement minimum tax rules.
A tech startup in Bethesda opening an Irish affiliate, for instance, might find that older IP planning strategies become less effective under Pillar Two rules. Mitigating risk starts by reevaluating your corporate structure with an eye toward evolving standards.
2. LLCs and Partnerships with Cross-Border Income
Pass-through entities may seem immune to international tax rules, but that's not always the case. If you are a U.S. person with foreign business interests through an LLC or partnership, GILTI and other anti-abuse rules may already be hitting your bottom line.
Layer onto that Pillar Two's new minimum standards, and you'll want to ensure you're still optimizing tax efficiency. Strategic planning can help you avoid double taxation and align your operating structure with best practices under both U.S. and global rules.
3. S-Corps with Foreign Holdings
S-corporations cannot have non-resident alien shareholders without losing their S-corp election status.. However, U.S. shareholders may own foreign entities as part of the broader business. If you're engaging in outbound investment, the indirect complexity of global tax rules—even ones you didn't think applied—can spell trouble without thoughtful planning.
4. Estate Planning and Succession
High-net-worth individuals creating trusts, gifting business interests, or planning for generational wealth transfer must now factor in potential global taxation shifts. If your family office holds investment assets abroad or in foreign structures, these could be subject to new minimum taxation rules.
A family in McLean gifting interests in a Cayman-based investment entity to the next generation would be wise to revisit that structure in light of global minimum tax concerns. Don't assume that what worked ten years ago will work tomorrow.
What Should You Do Now? Practical Insights
Start with awareness. Just because the U.S. hasn't enacted new Pillar Two laws doesn't mean that you're unaffected. Existing frameworks like GILTI, BEAT, and Subpart F may already impose global income inclusion, and their interaction with foreign countries' Pillar Two adoption could create compliance headaches.
Keep in mind:
Countries with heavy investment from U.S. firms are proceeding with Pillar Two independently of the U.S. For example, the EU, the UK, and several major Asian economies have either passed or are actively implementing their own versions of the global minimum tax.
Even if your business is only domestic today, your future buyer, investor, or partner might not be. A U.S. acquirer with international exposure will care deeply about how your tax risks are structured.
As the landscape shifts, the IRS and Treasury may update regulations under existing laws. What today looks like a compliant structure could tomorrow become a red flag.
Unique Perspective: A More Flexible U.S. Path
There's a strategic upside here. The U.S. need not rush to enact Pillar Two because it's already on parallel footing. That creates an opportunity for domestic businesses to watch how the international framework takes shape overseas before committing to large-scale restructurings.
Instead of scrambling to meet uncertain foreign standards, American firms can instead fine-tune internal compliance systems and stay focused on long-term planning.
Bottom Line for DMV-Area Clients
What may appear to be a distant international tax reform effort is, in truth, very much active policy here in the U.S. Our existing tax code already aligns with many parts of Pillar Two, and international negotiations are helping shape a global framework that doesn't blindside American businesses.
Still, the details matter. Whether you operate an LLC in Fairfax with IP registered abroad, or you're a business owner in Montgomery County preparing to sell a company that has foreign clients, these rules can come into play quickly.
If your financial footprint extends beyond the U.S.—or might in the future—don't wait for Washington or Brussels to finalize every rule. Start the conversation now.
Talk to a Trusted Advisor
If you're unsure how these developments affect your business, tax plan, or estate strategy, we're here to help. Schedule a consultation with Steve Thienel for insights specific to your goals and operations. At Thienel Law, we bring clarity to complexity—so you can move forward with confidence.