Global Minimum Tax and Profit Shifting

Tomas Boukal (), Petr Janský and Miroslav Palansky
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Tomas Boukal: Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia

No 2024/39, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

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: 55 pages
Date: 2024-10, Revised 2024-10
New Economics Papers: this item is included in nep-acc, nep-inv and nep-pbe
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Related works:
Working Paper: Global Minimum Tax and Profit Shifting (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2024_39

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