The Group of Seven (G7) nations and the United States have reached a consensus to ease potential tax burdens on American and British companies by endorsing a “side-by-side” system that provides exemptions from parts of the global corporate minimum tax framework.

The agreement, announced in a joint statement released by Canada — which currently holds the rotating G7 presidency — aims to bring greater stability to the international tax system.

The move follows the U.S. decision to withdraw Section 899 from a proposed tax and spending bill that had drawn concerns from international partners and multinational firms.

Section 899, introduced under former President Donald Trump’s executive order earlier this year, had threatened to impose retaliatory taxes on countries enforcing the 2021 global corporate minimum tax agreement.

Trump had argued that the U.S. was no longer bound by the arrangement negotiated under the Biden administration with more than 130 countries as part of the OECD-led Inclusive Framework.

In response, the G7 has now agreed to a parallel approach, which acknowledges the existing U.S. minimum tax laws while seeking to prevent double taxation and support tax certainty for multinational corporations.

A statement from the U.S. Treasury Department said the revised approach “preserves important gains made in addressing base erosion and profit shifting” and signals renewed cooperation with the Inclusive Framework on future negotiations.

The Department also said it anticipates further technical discussions on how the new system will be developed and implemented globally.

UK businesses, which had expressed growing unease in recent weeks over the prospect of paying significantly higher taxes under Section 899, welcomed the development. British Finance Minister Rachel Reeves said the agreement would provide “much-needed certainty and stability” for companies that were at risk of being disproportionately impacted.

“Today’s agreement marks an important step forward. However, more work remains to be done to tackle aggressive tax planning and avoidance,” Reeves added in a statement.

The G7, comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, said the agreement reflects its commitment to a tax system that is fair and predictable while protecting national interests. Officials also reiterated the need for a solution that is “acceptable and implementable to all jurisdictions within the Inclusive Framework.”

The 2021 global tax pact, led by the OECD, introduced a 15% global minimum corporate tax to prevent companies from shifting profits to low-tax jurisdictions. The deal has since faced political headwinds, with the U.S. reconsidering its participation under the Trump-led administration, prompting concerns from allies and multinationals alike.