Global Minimum Taxation?

Book overview

This books explores the ongoing debate regarding the shift towards global minimum taxation, championed by the proposed GloBE framework and its associated regulations, as outlined in the Pillar Two Blueprint Report.

Key themes and topics

The Global Anti-Base Erosion (GloBE) initiative represents a ground-breaking transformation in international taxation, with the potential to reshape the global tax system significantly. Unveiled in 2019, this proposal, often dubbed "BEPS 2.0," marks a pivotal moment in the ongoing battle against Base Erosion and Profit Shifting (BEPS). The core objective of GloBE is to address lingering BEPS issues by establishing rules that empower jurisdictions to reclaim taxes on foreign income when primary taxing rights are not exercised or when payments face exceptionally low effective taxation levels, potentially falling below an alternative minimum tax threshold. This could significantly impact corporate income tax calculations for multinational corporations engaging in tax avoidance and tax treaty strategies.

This comprehensive book takes a critical look at this revolutionary initiative, scrutinizing the intricacies of the Pillar Two framework outlined in the October 2020 Pillar Two Blueprint Report.

It explores the technical nuances of each proposed rule, including income inclusion, undertaxed payments, switchover, and subject-to-tax, shedding light on their design and interactions. Moreover, it examines pivotal overarching issues like determining the minimum effective tax rate (potentially a global minimum tax) and crafting a universal taxable income base.

Furthermore, this book contextualizes the proposed rules within key legal and policy frameworks, such as existing income tax treaties, transfer pricing regulations, EU laws, and significant US tax rules like GILTI and BEAT. This analysis is crucial to understanding how the GloBE initiative might interact with existing attempts to prevent double taxation.

This book also reflects on the broader policy considerations related to the potential implementation of these rules, also providing a specific focus on the challenges and opportunities that developing countries might encounter.

By way of conclusion, it explores the intersections between Pillar Two and Pillar One, and contemplates the potential for simplification of the proposed rules.