Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax

53 Pages Posted: 11 May 2022 Last revised: 4 Nov 2022

See all articles by Reuven S. Avi-Yonah

Reuven S. Avi-Yonah

University of Michigan Law School

Young Ran (Christine) Kim

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: May 6, 2022


The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue.

In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework of a global minimum corporate tax, known as Pillar Two. It aims to set a floor for corporate tax rates with various corrective measures so that multinational enterprises’ income will be taxed once in either source country or residence country at a substantive tax rate. Hence, Pillar Two is the first implementation of the “single tax principle” at the global level. Because Pillar Two requires an unprecedented amount of coordination among countries, it is important to understand Pillar Two thoroughly so that countries can maneuver the challenges of implementation, while still enjoying the ultimate benefit that would come from this global tax harmony.

This Article analyzes the issues of tax competition and why most countries in the world have come to the conclusion that a global minimum tax is needed. This Article explains the single tax principle as theoretical underpinning of Pillar Two, breaks down the principles and policies that comprise Pillar Two, and anticipates what promise and pitfalls passage of the global minimum tax will bring. Because the basis of Pillar Two is a direct extension of the Global Intangible Low Tax Income (GILTI) and Base Erosion and Anti-Abuse Tax (BEAT) provisions of the Tax Cuts and Jobs Act, it is reasonable to anticipate that the global minimum tax will be considered a success if it is implemented by all the G20 countries.

Keywords: international tax, global minimum tax, pillar two, single tax principle, tax competition, residence, source, base erosion, profit shifting, BEPS, global tax deal, OECD

JEL Classification: K34, K33, F23, F53, F55, F68, H25, H26,

Suggested Citation

Avi-Yonah, Reuven S. and Kim, Young Ran (Christine), Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax (May 6, 2022). 43 Michigan J. Int'l L. 505 (2022), University of Utah College of Law Research Paper No. 498, U of Michigan Law & Econ Research Paper No. 22-019, U of Michigan Public Law Research Paper No. 22-019, Available at SSRN:

Reuven S. Avi-Yonah

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

Young Ran (Christine) Kim (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

55 Fifth Ave.
New York, NY 10003
United States


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