In December, the OECD released model Global Anti-Base Erosion Rules (GloBE) rules for countries to implement a global minimum tax and for companies to adhere to. It subsequently published detailed technical guidance on these model rules in the form of a commentary and examples. A key development is the option to enact a Qualified Domestic Minimum Top-up Tax creditable against the GloBE rules in parent jurisdictions. This will be relevant for developing countries that otherwise would have little direct revenue to gain from the implementation of the global minimum tax. They could benefit indirectly from a reduction in tax competition and by gaining space to curtail tax incentives given to foreign investors.
Efforts by some of the largest residence countries, such as the United States and EU members, to implement their own minimum tax rules are facing obstacles. There also remain many aspects of GloBE rules to be agreed between the 130 countries of the inclusive framework. The OECD now expects the global minimum tax to be implemented in 2024 instead of 2023, the original target.
IISD has joined forces with the International Senior Lawyers Project to publish a toolkit in the coming months to guide policy-makers in developing countries as they consider revising domestic tax incentives that could be affected by a global minimum tax. This toolkit will build on UNCTAD’s World Investment Report 2022, Chapter 3: The Impact of a Global Minimum Tax on FDI. As the new global tax deal is implemented worldwide, we should ensure that multinational firms pay tax first and foremost in the developing countries where they operate, extract, and generate profits.