A Guide for Developing Countries on How to Understand and Adapt to the Global Minimum Tax

This guide provides policy-makers in developing countries with a simple framework to understand the global minimum tax, how it may affect them, and how to adapt their domestic tax policy in response.
By Allison Christians, Thomas Lassourd, Kudzai Mataba, Eniye Ogbebor, Alexandra Readhead, Stephen Shay, Zach Pouga Tinhaga on April 24, 2023

Many countries will be affected by the Pillar Two Global Anti-Base Erosion (GloBE) minimum tax proposal whether or not they participate actively in the OECDG20 Inclusive Framework on base erosion and profit shifting. The GloBE initiative creates a pool of potential tax revenues on corporate multinationals’ incomes to be collected by GloBE participating countries whenever the effective tax rate of a multinational in the country falls below 15%. Some domestic tax measures intended to attract and keep foreign investment may lose their effectiveness as a result. Further, some of GloBE’s impact may be indirect, providing lawmakers with an opportunity to consider policy reforms whether or not they adopt GloBE itself. It is in the interest of each country to examine the potential applicability of GloBE to its taxpayers and the interplay of GloBE rules with its domestic tax system in order to make informed decisions about whether and in what manner to respond. This guide provides guidance for making such informed decisions.

Guide details

Governance and Multilateral Agreements
Investment Law & Policy
Focus area
IISD and ISLP, 2023