Scandinavian Working Papers in Business Administration
Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science
No 2022/6: The global minimum tax raises more revenues than you think, or much less
Eckhard Janeba () and Guttorm Schjelderup ()
Additional contact information
Eckhard Janeba: Dept. of Economics, University of Mannheim, Postal: University of Mannheim, Department of Economics, L7 3-5, 68131 Mannheim, Germany
Guttorm Schjelderup: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
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
Language: English
34 pages, First version: February 7, 2022. Revised: February 22, 2023.
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