Global Minimum Tax and Profit Shifting

Tomáš Boukal (), Petr JanskyÌ () and Miroslav PalanskyÌ ()
Additional contact information
Tomáš Boukal: Charles University
Petr JanskyÌ: Charles University
Miroslav PalanskyÌ: Charles University and Tax Justice Network

No 25, Working Papers from EU Tax Observatory

Abstract: We develop a methodology to decompose the tax revenue impact of the global minimum tax introduced in 2024 into several components and quantify its potential impact on profit shifting. We apply it to 34 thousand multinational-country observations from tax returns, financial statements and country-by-country reports of all multinationals active in Slovakia. We find that the global minimum tax has the potential to decrease profit shifting by most multinationals, which are on average likely to pay higher effective tax rates in most countries worldwide post-reform. We find that Slovak corporate tax revenues will increase by 4%, with half of the increase due to its minimum top-up taxes. The other half of the increase is corporate income tax on profits that will no longer be shifted out of the country. We expect the global minimum tax to target 49% of previously shifted profits.

Keywords: Global minimum tax; profit shifting; multinationals; tax avoidance (search for similar items in EconPapers)
JEL-codes: H25 H26 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2025-01
New Economics Papers: this item is included in nep-acc, nep-inv and nep-iue
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.taxobservatory.eu//www-site/uploads/20 ... fting-with-cover.pdf Full working paper (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dbp:wpaper:025

Access Statistics for this paper

More papers in Working Papers from EU Tax Observatory Contact information at EDIRC.
Bibliographic data for series maintained by Inga Chilashvili ().