Global Minimum Taxation: A Strategic Approach for Developing Countries

25 Pages Posted: 22 Nov 2022 Last revised: 21 May 2024

See all articles by Leopoldo Parada

Leopoldo Parada

University of Leeds School of Law

Date Written: October 2, 2023

Abstract

The world has seemingly embraced the altruistic idea of ensuring a
minimum level of corporate income taxation worldwide, consolidating a “benefits
for all” narrative by which both developed and developing countries apparently
gain. However, this altruistic narrative proves to be quite unrealistic for many
developing countries. As argued in this article, the perceived benefits of a global
minimum corporate income tax in developing countries rest exclusively upon three
unconvincing premises. These include the assumption that all corporate income tax
incentives provided by developing countries are equally inefficient, the idea that
all developing countries can seamlessly transition from corporate income tax
competition to alternative forms of tax and non-tax competition, and most notably,
the notion that supporting or opposing a global minimum corporate income tax
could either boost or diminish tax revenue for developing countries. This article
urges a departure from these premises and elaborates upon three strategic
recommendations for developing countries, which include: first, viewing a global
minimum corporate income tax as a concept divorced from the assumption of
revenue gain or loss; second, using the global minimum corporate income tax as
an opportunity to reassess their tax and non-tax incentives, encompassing
alternative competitive strategies; and third, striving for simplicity and ease of
administration in designing and implementing a minimum tax approach. In doing
so, developing countries could perhaps find an opportunity to refine their general
action plan to attract foreign direct investment (FDI) more effectively while they
still try to ride the wave of minimum global corporate income taxation that the
world seems to be in.

Keywords: GloBE; minimum taxation; corporate tax; BEPS

JEL Classification: K34

Suggested Citation

Parada, Leopoldo, Global Minimum Taxation: A Strategic Approach for Developing Countries (October 2, 2023). Columbia Journal of Tax Law, Vol. 15, No. 2, 2024, Available at SSRN: https://ssrn.com/abstract=4280669 or http://dx.doi.org/10.2139/ssrn.4280669

Leopoldo Parada (Contact Author)

University of Leeds School of Law ( email )

Liberty Building
Belle Vue Road
Leeds, LS2 9JT
07864721649 (Phone)
LS2 9JT (Fax)

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