cover image: Are the global tax proposals in the interests of low- and middle-income countries?

20.500.12592/rg6mtz

Are the global tax proposals in the interests of low- and middle-income countries?

19 Aug 2021

This pecking order is the latest manifestation of the tug-of-war between multinational corporations’ home (aka residence) and host (aka source) countries, which dates back to the 1 The only profits that would fall through the cracks of the global minimum tax are those generated in countries that choose to opt out of the global minimum tax by multinationals whose headquarter countries also decide t. [...] The so-called “Subject to Tax Rule” that is part of the agreement is a very poor consolation prize for low and middle-income countries in that regard.2 Sovereign states currently have the right to adopt something like the global minimum tax unilaterally, as the United States did in 2017 with the GILTI and BEAT regime. [...] The OECD retorts that the priority for residence countries makes the global minimum tax much easier to administer, as each multinational will pay the tax to a single country (its home country) rather than to all the countries where it operates. [...] A coalition of the willing could opt out of the global minimum tax, copy all the technical work done by the OECD, and adopt an alternative global minimum tax that would be exactly the same as the one agreed to by the Inclusive Framework except that it would be collected in priority by countries where multinationals operate rather than headquarter countries. [...] However, the former estimate is misleading because it relies on the unrealistic assumption that the taxable profits from multinational corporations headquartered in countries that opt out of the global minimum tax will be distributed among other countries according to their share of the corporations’ global turnover.

Authors

Elizabeth Stevens

Pages
7
Published in
United States of America