Skip to content

Base Erosion and Profit Shifting (BEPS)

The OECD and other multilateral forums have been exploring options to resolve the current debate over policies that would adjust which countries can tax what share of income from multinational corporations. Just as the policy changes from the Base Erosion and Profit Shifting (BEPS) project in 2015 created different incentives for business investment by multinational corporations and the design of their supply chains, this new debate will also change those incentives.

The impact of these policies should be taken into consideration by policymakers when determining whether additional measures should be adopted to further minimize policy gaps and opportunities for tax planning. Taxes matter for decisions to be made by businesses, individuals, and families, and it is important for policymakers to understand that rules can be designed to be neutral rather than distortionary.

The posts below review the evidence that has been gathered on the impact of policies targeted at profit shifting.

Launch U.S. International Tax Resource Center

All Related Articles

US Pillar Two responses should include a policy response from Congress on the OECD global tax deal's global minimum tax

How the U.S. Can Piece Together a Solution for Pillar Two

Congress should recognize that Pillar Two has significant U.S.-specific downsides, but also that it cannot unilaterally stop Pillar Two from taking effect. Instead, it should carefully consider a policy response for the next Congress, when a variety of forces are likely to compel it to act.

Carbon Border Adjustment Mechanism EU CBAM carbon price carbon tariffs US global minimum tax US tax incentives Build Back Better tax rate on gilti Global Intangible Low Tax Income (GILTI) Global intangible low-taxed income US cross-border tax reform and GILTI Global Intangible Low Tax Income. Foreign tax credits

JCT Analyzes Federal Revenue Effects of Pillar Two

The JCT analysis raises some useful questions for the U.S. domestic debate over Pillar Two. The Treasury Department should examine its support for an agreement that will reduce its own revenue intake. But it is also worth noting that the principal mechanism for the revenue reduction—the foreign tax credit—is a policy already baked into U.S. law, including the Republican-enacted global minimum tax from 2017. The OECD deal merely takes advantage of this longstanding feature.

global tax agreement global tax deal OECD global minimum tax rules corporate minimum tax rules Secretariat Proposal, OECD Public Consultation Document, Unified Approach under pillar one profit shifting definition tax planning and avoidance foreign direct investment FDI global tax deal impact of global tax agreement OECD international tax proposal

The Latest on the Global Tax Agreement

The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals in light of it. However, with both the U.S. and EU hitting roadblocks in their respective legislative processes, it is unclear when or even if the agreement will be implemented. If implementation fails, a return to a world of distortive European digital services taxes and retaliatory American tariffs could be on the horizon.

Tax competition and the global minimum tax: the latest on the global tax agreement at the OECD

What’s Next for Tax Competition?

The rules of tax competition are changing with the recent agreement on a global minimum tax and other changes to tax rules around the world, but that does not mean the contest is over.

Biden corporate minimum tax global tax deal international tax corporate tax corporate global minimum tax proposal

4 Things to Know About the Global Tax Debate

The Biden administration has been supportive of the negotiations, but the changes should be reviewed in the context of recent policy changes in the U.S. and elsewhere, the general landscape of business taxation in the U.S., and potential challenges and risks arising from the global tax deal.