The Big Beautiful Bill has narrowly passed the US Senate following “revenge” tax negotiations that secured US multinationals’ exemptions from OECD global minimum tax rules.

The US’ One Big Beautiful Bill has been passed in the Senate following a razor-thin 50-51 vote, leaving it one step closer to being ratified into law.

Last week, the US agreed to remove the bill’s section 899 ‘revenge tax’ provisions following negotiations with G7 allies.

Section 899 would have subjected entities from “discriminatory foreign countries” to US tax hikes of up to 15 per cent – a category Australia would likely belong to due to its adoption of OECD global minimum tax measures.

To convince US lawmakers to axe the revenge tax, the G7 agreed to exempt US companies from OECD Pillar 2 global minimum tax rules.

Kerrie Sadiq, professor of taxation at QUT Business School, said that the US exemption had paved the way for a “side by side” international tax system, wherein US-headquartered multinationals saw preferential treatment under global tax laws.

She predicted that the G7 deal could cause discontent among the 140 countries that had already agreed to accept minimum global tax requirements under the OECD/G20 inclusive framework on base erosion and profit shifting.

“This is a G7 deal, and we're looking at 140 countries that have agreed. So the question is whether all of these other countries are going to be happy with this ‘side-by-side’ solution that excludes US-parented groups from the 15 per cent minimum tax,” Sadiq said.

“They could see it as preferential treatment being given to the US when these countries have had to sign up themselves, and they've been required to toe the line, and the US hasn't.”

She added that it was currently unclear how the OECD global minimum tax system would coexist with the US Globally Intangible Low-Taxed Income (GILTI) system.

“That's where there is uncertainty. Obviously, this [G7] agreement is still at a very high level, and it's when you get down into the specifics and you start applying the legislation [that you] start discovering where the real problems lie,” Sadiq said.

“We simply don't know yet, at a pragmatic level, how the two systems will coexist.”

While specifics remain uncertain, Sadiq said that the US deal could also be seen as a way to move forward with OECD global minimum tax rules, which had previously been locked in a stalemate due to US concerns about their own tax sovereignty.

Jenny Wong, tax lead for CPA Australia, also warned that the US exemption from OECD tax rules could lead to an uncertain, fragmented future for international efforts to crack down on multinational tax avoidance.

“With the US stepping away from Pillar Two, it does make coordination much harder and the path forward more uncertain. Without the US on board, there is a real risk of tax fragmentation, so Australian businesses could end up being caught in the middle,” Wong said.

She echoed sentiments that the G7 deal could lock in a “two-speed” global tax system.

International tax implications aside, the Big Beautiful Bill is set to have far-reaching consequences across the US economy.

The Congressional Budget Office (CBO) estimated that the bill would add approximately $3.3 trillion to the US budget deficit by 2034 through its $4.5 trillion tax cuts and spending boosts to defence and deportations.

To partially offset the sweeping tax cuts, the bill would slash spending on social security programs such as Medicaid and food assistance for the poor.

The CBO estimated that the bill would leave 7.8 million more Americans without health insurance by 2034, and render 3.2 million people ineligible for food stamps.

The bill will now head to the US House of Representatives where it faces another tight vote and could undergo further revisions. US President Donald Trump has placed pressure on Republican lawmakers to have the bill on his desk, ready to be signed into law by 4 July.