The OECD Global Corporate Tax Deal: What It Is, What It Will Do, and Why It’s Good

Abstract

This piece considers the reforms proposed by the OECD to the global corporate tax landscape in 2021. The first pillar of the reforms concerns taxing rights. It provides that corporations must pay tax in the region where the economic activity that generated the value took place. The second pillar proposes a global minimum effective corporate tax rate of 15%. This piece discusses these reforms and their implications for Ireland which has, since the early Noughties, applied a corporate tax rate of 12.5%. While Ireland's attractiveness as a location for foreign direct investment is not due solely to its corporate tax rate, the 12.5% rate is widely considered to be an important factor in Ireland's FDI strategy which the OECD proposals may now put at risk.

Keywords: Tax, Corporation, Company Law, Foreign Direct Investment, Corporate Tax, OECD, European Union, Ireland, France, Apple, Google, Corporate Tax Reform, Corporate Tax Avoidance, Common Consolidated Corporate Tax Base, Forum Shopping

JEL Classification: K00, K2, K34, K22