Taxation of Multinational Businesses

Profit Shifting

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.

Why FDI Matters for U.S. Employment, Wages, and Productivity

Contrary to the Biden administration’s claims, raising taxes on cross-border investment would hurt U.S. economic growth and jobs. Research shows that FDI creates jobs in the U.S. and raises workers’ wages and productivity.

Foreign Direct Investment (FDI)

Comparing the Corporate Tax Systems in the United States and China

Federal policymakers are debating a legislative package focused on boosting U.S. competitiveness vis-a-vis China; however, it currently contains little to no improvements to the U.S. tax code.

Which Global Minimum Tax Will We Get?

Over the course of the last year, it has become clear that Democratic lawmakers want to change U.S. international tax rules. However, as proposals have been debated in recent months, there are clear divides between U.S. proposals and the global minimum tax rules.

Let’s Make a Global Tax Deal

Late last year, over 130 countries agreed to a global minimum tax, a purported end-all and be-all to the “race to the bottom.” But this policy is complex, and countries are already struggling to implement these new rules. We talk through how this policy came to be, identify where problems are beginning to arise, and dispel some common myths about this emerging new tax system.

Accounting for the Global Minimum Tax

Double taxation impacts the ability of companies to invest valuable things like improving their supply chains, developing new products, and hiring workers, and it can be fixed if the minimum tax uses a country’s own tax rate.

A Regulatory Tax Hike on U.S. Multinationals

While much of the policy focus has been on proposals embedded in the Build Back Better agenda, a meaningful tax hike for multinational companies has already been adopted.

The Global Minimum Tax Changes the Game for Build Back Better Revenue

One goal for the Build Back Better Act has been to increase the amount of revenue the U.S. raises from U.S. companies at home or abroad. With the global minimum tax rules in play, it is likely that the expected gains to the U.S. Treasury from foreign profits of U.S. companies will diminish.

Rushing Headlong into Formulary Apportionment

Complex tax policies that work well “in theory” can often have a hard time when the rubber meets the road. One instance of this is the challenge that the OECD has created for itself with the global tax deal, also fondly known as Pillar 1 and Pillar 2.

10 Tax Reforms for Growth and Opportunity

By reducing the tax code’s current barriers to investment and saving and simplifying its complex rules, lawmakers would greatly enhance the ability of Americans to pursue new ideas, create more opportunities, and build financial security for themselves and their families.

OECD Pillar One

OECD Pillar Two (Global Minimum Tax)

U.S. Tax Incentives Could be Caught in the Global Minimum Tax Crossfire

The current prospect for the global minimum tax requires the attention of U.S. lawmakers. Otherwise, a tax benefit at home will just mean a tax increase abroad.

GILTI: Foreign Tax, Local Impact

Since only U.S. businesses pay the GILTI tax, not foreign businesses, it makes U.S.-based brands less competitive abroad. Whatever its intentions, GILTI is a flawed policy, and doubling down on it will hurt us abroad, and at home.

Gift or Lump of Coal: U.S. Cross-border Tax Changes Won’t Be Home for Christmas

As 2021 comes to a close, countries are moving toward harmonizing tax rules for multinationals, but stalled talks on the Build Back Better Act in the United States means new uncertainties for a global agreement and for taxpayers.

What Do Global Minimum Tax Rules Mean for Corporate Tax Policies?

The new OECD global minimum tax rules are complex, and some countries may opt to put them in place on top of preexisting rules for taxing multinational companies. However, countries should also consider ways to reform their existing rules in response to the minimum tax.

Book Minimum Tax versus Corporate Rate Increase: Pick Your Poison

While the book minimum tax is smaller in scale than the proposed original corporate rate increases, it would introduce more complexity, inefficiency, and problems at the industry- and sector-levels that a corporate rate increase would not. Neither option is an optimal way to raise new tax revenues.

How Do Build Back Better Taxes Affect 5G Competition?

One unintended consequence of the tax proposals in the Build Back Better Act is a higher potential burden on wireless spectrum investments, which could slow the build out of 5G technology as the U.S. races to compete with other countries—moving in the opposite direction of countries like China that are actively subsidizing 5G expansion.