Why 15%? Justifying the Global Corporate Minimum Tax

Abstract

The global corporate minimum tax (GLoBE) as embodied in Pillar 2 of the OECD/IF BEPS 2.0 proposal was set in October 2021 at 15% of the financial statement income of within scope MNEs. That is also the rate and the base of the new US corporate alternative minimum tax (CAMT). The Single Tax Principle (STP) on which Pillar 2 is built suggests that the rate should be the average OECD corporate tax rate (about 23%). So, is the 15% rate only a concession to political reality? No, because it represents a justifiable compromise between the three goals of the corporate tax.

Keywords: OECD, Pillar 2, GLoBE, CAMT

JEL Classification: H26