The need for global minimum tax assessing Pillar Two reform Suranjali Tandon
By: Tandon, Suranjali
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Material type: 
ArticleSubject(s): SEGUNDO PILAR (OCDE) | IMPUESTO DE SOCIEDADES | TIPO MÍNIMO GLOBAL
In:
Intertax v. 50, issue 5, May 2022, p. 396-413Summary: In 2021 the OECD announced its proposal to introduce a global minimum tax. This article reviews the existing international tax rules to demonstrate that their inefficient design is among the key factors that have compelled developed countries to support a global minimum rate. In contrast to the previous approach where the OECD identified harmful tax practices, pillar two seeks to address tax competition. In doing so tax rates and incentives will be re-calibrated so as to ensure that a corporation pays 15% in each jurisdiction. For this the rules allow the residence countries to tax back the difference between the minimum and effective tax rate (ETR). The design of the rules indicates that developing countries will not gain tax revenues from this proposal. A more important point for developing countries to consider is that tax structures depend on regulation and structure of the economy. This article presents evidence to suggest that countries must weigh their overall economic objectives against the minimum tax.
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| Artículos | IEF | IEF | OP 2141/2022/5-2 (Browse shelf) | Available | OP 2141/2022/5-2 |
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| OP 2141/2022/4-6 Honduran Zones for Employment and Economic Development (ZEDEs) in light of BEPS Action 5 | OP 2141/2022/5 Intertax | OP 2141/2022/5-1 The Pillar Two top-up taxes | OP 2141/2022/5-2 The need for global minimum tax | OP 2141/2022/5-3 Global minimum corporate tax | OP 2141/2022/5-4 Uganda’s tax system | OP 2141/2022/5-5 Unilateral digital services tax in Africa |
Resumen.
In 2021 the OECD announced its proposal to introduce a global minimum tax. This article reviews the existing international tax rules to demonstrate that their inefficient design is among the key factors that have compelled developed countries to support a global minimum rate. In contrast to the previous approach where the OECD identified harmful tax practices, pillar two seeks to address tax competition. In doing so tax rates and incentives will be re-calibrated so as to ensure that a corporation pays 15% in each jurisdiction. For this the rules allow the residence countries to tax back the difference between the minimum and effective tax rate (ETR). The design of the rules indicates that developing countries will not gain tax revenues from this proposal. A more important point for developing countries to consider is that tax structures depend on regulation and structure of the economy. This article presents evidence to suggest that countries must weigh their overall economic objectives against the minimum tax.
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