Chapter 1 Appendix: Trends in global offshore tax evasion

We use this model to quantify the effects on global corporate tax revenues of the Pillar-Two 15% minimum tax and of the various provisions in the most recent Pillar-Two rules, including the carve-out for substance, the treatment of tax credits, and the partial and temporary suspension of the under-taxed payment rules (UTPR). [...] First, we model the impact of the treatment of tax credits in the Pillar-Two agreement as equivalent to a 2 percentage points change in the effective tax rate (i.e., equivalent to having a 13% minimum tax instead of 15%). [...] Estimating the fiscal cost of preferential personal income tax regimes We calculate the average tax benefit of the regime by computing the tax that would be payable on the average beneficiaries’ income according to the general tax schedule in the host country (without the regime) and subtract the tax payable under the regime. [...] For the Irish remittance regime, we use the average tax benefit in from the UK regime and apply it to the number of beneficiaries in Ireland as both regimes seem to target a similar population. [...] To be consistent with our estimates for the Italian and Greek HNWI regime, we compute the baseline fiscal cost estimate under the assumption that the average taxable income is the break-even income plus €250,000 (CHF 227,000): For the resulting average taxable income of CHF 827,000 the tax payable without the regime would jump to CHF 248,000.