GEORGETOWN PROF: STAGE SET FOR GLOBAL MINIMUM CORPORATE TAX

Georgetown University Prof. Lilian V. Faulhaber thinks the world is moving closer to the adoption of a global minimum corporate tax, not only to ensure that developing and rich countries enjoy more revenue but also to set the stage for an end to disruptive corporate pullouts from various jurisdictions.

Writing an opinion piece for Mainichi Japan, Prof. Faulhaber said various nations have toyed with the idea of the global minimum tax for many years as part of what she said was international tax reform.

“In the early 2010s, the Obama administration included a version of a minimum tax in its international tax reform proposals, but this never ended up being adopted. At the same time, as part of its Base Erosion and Profit Shifting (BEPS) Project, the Organization for Economic Co-operation and Development (OECD) also alluded to the possibility of a minimum tax as a solution to corporate tax avoidance, but this did not attract enough support from the G-20 or OECD member countries to end up being recommended,” she argued.

“Internationally, whether the international community agrees to and implements a global minimum tax depends on whether or not countries can see benefits in abandoning tax competition, or the ‘race to the bottom.’ The reason for a global minimum tax is to ensure both that companies pay a minimum amount of tax on their income and, relatedly, that countries cannot undercut each other by offering low tax rates and thereby attracting income, assets, and companies away from higher tax jurisdictions,” Prof. Faulhaber stressed.

She noted that US President Joe Biden is confident that an agreement on the global minimum tax can be achieved sooner than expected.

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