The International Tax Agreement of 2021: Why It's Needed, What it Does, and What Comes Next?

18 Pages Posted: 27 Apr 2023

See all articles by Kimberly A. Clausing

Kimberly A. Clausing

UCLA School of Law; Peterson Institute for International Economics

Date Written: April 18, 2023

Abstract

In 2021, more than 135 jurisdictions agreed on transformative new international tax rules that would establish a minimum tax rate of 15 percent on multinational corporate income regardless of where it was reported. In December 2022, the European Union unanimously moved forward to implement this minimum tax, and other countries, including South Korea, Japan, Australia, Canada, and the United Kingdom, are also either implementing the tax or taking substantial steps toward implementation. In tandem, the United States should also reform its international tax system and adopt a stronger minimum tax. While the future of the international agreement is uncertain, it has important implications for the ability of governments worldwide to create tax systems that are administrable, fair, and efficient. The agreement also demonstrates important guiding principles for the future of multilateral cooperation on global collective action problems, including efforts to protect public health from future pandemics, address nuclear proliferation, and resolve territorial conflicts. US progress on international tax reform would enhance much needed international cooperation on these issues.

Keywords: Taxes, Organization for Economic Cooperation and Development, Multinational Corporations

Suggested Citation

Clausing, Kimberly A., The International Tax Agreement of 2021: Why It's Needed, What it Does, and What Comes Next? (April 18, 2023). Peterson Institute for International Economics Policy Brief No. 23-4, Available at SSRN: https://ssrn.com/abstract=4431077

Kimberly A. Clausing (Contact Author)

UCLA School of Law ( email )

385 Charles E. Young Drive East
Los Angeles, CA 90095-0001
United States

HOME PAGE: http://law.ucla.edu/faculty/faculty-profiles/kimberly-clausing

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

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