Global Tax Deal

International Tax Rule

Can GILTI and the GloBE be Harmonized in a Biden Administration?

While there are several parts of the policy that are subject to further discussion and agreement, GloBE is expected to be different from GILTI in several ways.

U.S. Cross-border Tax Reform and the Cautionary Tale of GILTI

The Biden campaign and Senate Democrats identified changes to GILTI that would increase the taxes U.S. companies pay on their foreign earnings. Rather than tacking on changes to a system that is currently neither fully territorial nor worldwide, policymakers should evaluate the structure of the current system with a goal of it becoming more, not less, coherent.

Tax Foundation Response to OECD Public Consultation Document: Reports on the Pillar One and Pillar Two Blueprints

The Tax Foundation response to the OECD public consultation document on the reports on the OECD Pillar 1 and OECD Pillar 2 blueprints.

Pillars, Blueprints, an Impact Assessment, and Construction Delays

The OECD released blueprints for proposals on changing international tax rules alongside an impact assessment based on the overall design of the proposals. While the blueprints cover proposals both for changing where large multinationals owe corporate tax and designing a global minimum tax, there are still many unanswered questions. In the meantime, other digital tax proposals are moving forward and have the potential to result in a harmful tax and trade war.

Designing a Global Minimum Tax with Full Expensing

The design and implementation of a global minimum tax is not simple and straightforward. There are dozens of challenging issues that policymakers will need to consider. So, when it comes to the way the minimum tax treats new investment, it seems clear that incorporating full expensing into the design would have significant benefits.

Where Should the Money Come From?

The fiscal response to the COVID-19 pandemic will require policymakers to consider what revenue resources should be used to fill budget gaps. Tax policy experts have proposed wealth taxes, (global) corporate minimum taxes, excess profits taxes, and digital taxes as opportunities for governments to raise new revenues.

Territorial Tax System

Worldwide Tax System

Decades in Corporate Taxation

Corporate taxation has evolved significantly, with rates coming down significantly over the last several decades. Countries have redesigned their tax bases by changing the treatment of losses, interest, and capital costs. A recent OECD report highlights the general stabilization of corporate tax revenues and statutory rates alongside major changes to address profit-shifting opportunities.

Tax Policy Proposals for the German EU Presidency

While much of Germany’s EU presidency agenda is focused on policies to ensure economic stability and recovery from the COVID-19 pandemic, there’s a pair of tax proposals that the country is planning to develop and move forward at the EU level: a financial transaction tax and a minimum effective tax.

A Blow to Pillar 1

The U.S. has called for a pause in global digital tax negotiations, dealing a blow to Pillar 1 of the OECD’s international tax project. What happens next could be very harmful for the global economy.

Summary of the OECD’s Impact Assessment on Pillar 1 and Pillar 2

The OECD presented its preliminary impact assessment on the Pillar 1 and Pillar 2 proposals. The impact assessment includes estimated revenue and investment effects presented at a country group level (low-, middle- and high-income countries and investment hubs). The OECD estimates global corporate income tax revenues to increase by 4 percent if both pillars get implemented, equaling $100 billion annually.

Bracing for Impact

Though they are limited by both data and assumptions, the OECD will face similar limitations. As policymakers work to fine-tune the proposals under both Pillar 1 and 2 the impact assessment should be a critical part of that discussion.

FAQ on Digital Services Taxes and the OECD’s BEPS Project

What is a digital services tax (DST)? What countries have announced, proposed, or implemented a DST? What are some of the criticisms of a DST? What are alternatives to a DST? What is the OECD BEPS project and what is its main objective? What is the main objective of OECD Pillar 1? What is the main objective of OECD Pillar 2?

Another Digital Services Tax? Canada Adds Its Proposal to the Mix

Blending Considerations for Minimum Taxes on Foreign Income

Tax Foundation Response to OECD Public Consultation Document: Global Anti-Base Erosion Proposal (“GloBE”) (Pillar Two)

The tax base for the income-inclusion rule will be just as important as determining the rate, and both the base and the rate will likely impact business decisions. Additionally, policymakers need to determine how the choice for blending fits with the overarching goal of the policy. And as the example of GILTI shows, it is essential to assess how current international tax regulations would interact with a global minimum tax.

Response to OECD Public Consultation Document: Secretariat Proposal for a “Unified Approach” under Pillar One

Unifying the proposal under sound principles in the context of clear economic analysis should allow the Inclusive Framework to minimize both the administrative and economic burdens that the Secretariat’s proposal could create.

The OECD’s Pillar 2 Proposal Raises Serious Questions

Addressing tax avoidance is a key political issue for many countries, but these policies should not be discussed without accounting for the size of the current problem, how recent policy changes have addressed it, and what potential impacts might come from this new approach.