A Global Minimum Tax for Large Firms Only : Implications for Tax Competition

Haufler, Andreas; Kato, Hayato

Discussion Papers In Economics And Business, 2024, 24-06, 1-31

Number of Access:401（2025-09-04 08:33 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/95432

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Title
A Global Minimum Tax for Large Firms Only : Implications for Tax Competition
Creator
CreatorName
Haufler, Andreas
NRID
1000030837703 1000030837703
ORCID
0000-0002-2063-8453 0000-0002-2063-8453
researchmap permalink
30837703 30837703
Scopus Author ID
57200115385 57200115385
CreatorName
Kato, Hayato
Subject
multinational firms
tax avoidance
profit shifting
tax competition
Abstract
The Global Minimum Tax (GMT) is applied only to firms above a certain size threshold. We set up a simple model of tax competition and profit shifting by heterogeneous multinational firms to evaluate the effects of this partial coverage of the GMT. A non-haven and a haven country are bound by the GMT rate for large multinationals, but can set tax rates for firms below the threshold non-cooperatively. We show that the introduction of the GMT with a moderate tax rate increases tax revenues in both the non-haven and the haven countries. Gradual increases in the GMT rate, however, trigger a sudden change in the tax competition equilibrium from a uniform to a split corporate tax rate, at which tax revenues in the non-haven country decline. In contrast, gradual increases in the coverage of the GMT never harm the non-haven country. We also discuss the quantitative effects of introducing a 15% GMT rate in a calibrated version of our model.
Publisher
Graduate School of Economics, Osaka University
Source Title
Discussion Papers In Economics And Business
Volume (Issue)
24-06
Page
1-31
Date of Issued
2024-04
Language
English
Handle URL
https://hdl.handle.net/11094/95432
Relation.references
URI
https://www2.econ.osaka-u.ac.jp/econ_society/dp/2406.pdf
Access Rights
metadata only access
Category
ディスカッション／ワーキング・ペーパー DP/WP
Discussion Papers In Economics And Business