A Global Minimum Tax for Large Firms Only: Implications for Tax Competition

Andreas Haufler and Hayato Kato

Papers from arXiv.org

Abstract: The Global Minimum Tax (GMT) is applied only to firms above a certain size threshold, permitting countries to set differential tax rates for small and large firms. We analyse tax competition among multiple tax havens and a non-haven country for heterogeneous multinationals to evaluate the effects of this partial coverage of GMT. Upon the introduction of a low but binding GMT rate, the havens commit to the single uniform GMT rate for all multinationals. However, gradual increases in the GMT rate induce the havens, and subsequently the non-haven, to adopt discriminatory, lower tax rates for small multinationals. Our calibration exercise shows that introducing a GMT rate close to 15\% results in a regime where only the havens adopt split tax rates. Welfare and tax revenues fall in the havens but rise in the non-haven, yielding a positive net gain worldwide.

Date: 2024-04, Revised 2026-02
New Economics Papers: this item is included in nep-acc, nep-gth, nep-int, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2404.14302 Latest version (application/pdf)

Related works:
Working Paper: A global minimum tax for large firms only: Implications for tax competition (2025)
Working Paper: A Global Minimum Tax for Large Firms Only: Implications for Tax Competition (2024)
Working Paper: A Global Minimum Tax for Large Firms Only: Implications for Tax Competition (2024)
Working Paper: A Global Minimum Tax for Large Firms Only: Implications for Tax Competition (2024)
Working Paper: A Global Minimum Tax for Large Firms Only: Implications for Tax Competition (2024)
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:arx:papers:2404.14302

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().