The global minimum tax raises more revenues than you think, or much less

Eckhard Janeba and Guttorm Schjelderup

No 2022/6, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: The OECD’s proposal for a global minimum tax (GMT) of 15% aims for a reversal of a decline of corporate tax rates. We study the revenue effects of the GMT by focusing on strategic tax setting effects. The direct effect from less profit shifting increases revenues in high-tax countries. A secondary effect, however, is that the value of attracting foreign investments increases, which intensifies tax competition. We show that when governments compete via firm-specific or uniform subsidies, the revenue gains from less profit shifting are exactly offset by higher subsidies. When competition is by tax rates, revenues may increase however.

Keywords: Global Minimum Tax; Tax Competition; OECD BEPS; Pillar II (search for similar items in EconPapers)
JEL-codes: F23 F55 H25 H73 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-02-07, Revised 2023-02-22
New Economics Papers: this item is included in nep-cwa, nep-gth, nep-his, nep-int, nep-pbe and nep-pub
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Citations: View citations in EconPapers (14)

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Journal Article: The global minimum tax raises more revenues than you think, or much less (2023)
Working Paper: The Global Minimum Tax Raises More Revenues than You Think, or Much Less (2023)
Working Paper: The Global Minimum Tax Raises More Revenues than You Think, or Much Less (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhhfms:2022_006

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