The Global Minimum Tax
23 Pages Posted: 4 Feb 2022
There are 3 versions of this paper
Date Written: January 2022
Abstract
This paper studies how the global minimum tax shapes national tax policies and welfare in a formal model of international tax competition with heterogeneous countries. The net welfare effect is generally ambiguous from the perspective of non-havens. On the one hand, the global minimum tax raises their welfare by curbing profit shifting, which boosts government revenue. One the other hand, it lowers their welfare by increasing equilibrium tax rates in havens, which transfers real resources from non-haven firms to haven governments. The net welfare effect is unambiguously positive when the global minimum rate is so high that profit shifting ends.
Keywords: global minimum tax, International Taxation, multinational firms, Profit shifting, Tax avoidance
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