Pareto-Improving Minimum Corporate Taxation

Shafik Hebous and Michael Keen

No 2021/250, IMF Working Papers from International Monetary Fund

Abstract: The recent international agreement on a minimum effective corporate tax rate marks a profound change in global tax arrangements. The appropriate level of that minimum, however, has been, and remains, extremely contentious. This paper explores the strategic responses to a minimum tax, which—the policy objective being to change the rules of tax competition game--—are critical for assessing the design and welfare impact of, and prospects for, this fundamental policy innovation. Analysis and calibration plausibly suggest sizable scope for minima that are Pareto-improving, benefiting low as well as high tax countries, over the uncoordinated equilibrium.

Keywords: Tax Competition; Minimum Taxation; Corporate Tax Reform; International Taxation; competition game; policy objective; corporate tax reform; best response; country benefit; residence country; Corporate income tax; Competition; Tax avoidance; Global (search for similar items in EconPapers)
Pages: 23
Date: 2021-10-22
New Economics Papers: this item is included in nep-acc, nep-gth, nep-pbe and nep-pub
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Citations: View citations in EconPapers (10)

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Journal Article: Pareto-improving minimum corporate taxation (2023)
Working Paper: Pareto-Improving Minimum Corporate Taxation (2022)
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