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Monday, June 26, 2023
Avi-Yonah & Kim: The Promise And Pitfalls Of The World Minimal Tax
Reuven S. Avi-Yonah (Michigan; Google Scholar) & Younger Ran (Christine) Kim (Cardozo; Google Scholar), Tax Concord: The Promise and Pitfalls of the World Minimal Tax, 43 Mich. J. Int’l L. 505 (2022):
The rise of globalization has develop into a double-edged sword for international locations looking for to implement a helpful tax coverage. On one hand, there are elevated alternatives for attracting international capital and the advantages that elevated jobs and tax income brings to a society. Nevertheless, there’s additionally far more tax competitors amongst international locations to draw international capital and funding. As tax competitors has grown, efficient company tax charges have continued to be reduce, making a “race-to-the-bottom” subject.
In 2021, 137 international locations forming the OECD/G20 Inclusive Framework on BEPS handed a serious milestone in reforming worldwide tax by efficiently introducing the framework of a worldwide minimal company tax, often known as Pillar Two. It goals to set a flooring for company tax charges with varied corrective measures in order that multinational enterprises’ earnings can be taxed as soon as in both supply nation or residence nation at a substantive tax charge.
Therefore, Pillar Two is the primary implementation of the “single tax precept” on the international degree. As a result of Pillar Two requires an unprecedented quantity of coordination amongst international locations, you will need to perceive Pillar Two totally in order that international locations can maneuver the challenges of implementation, whereas nonetheless having fun with the final word profit that will come from this international tax concord.
This Article analyzes the problems of tax competitors and why most international locations on the planet have come to the conclusion {that a} international minimal tax is required. This Article explains the one tax precept because the theoretical underpinning of Pillar Two, breaks down the rules and insurance policies that comprise Pillar Two, and anticipates what promise and pitfalls passage of the worldwide minimal tax will carry. As a result of the premise of Pillar Two is a direct extension of the World Intangible Low Tax Revenue (GILTI) and Base Erosion and Anti-Abuse Tax (BEAT) provisions of the Tax Cuts and Jobs Act, it’s affordable to anticipate that the worldwide minimal tax can be thought of successful whether it is carried out by all of the G20 international locations.
https://taxprof.typepad.com/taxprof_blog/2023/06/tax-harmony-the-promise-and-pitfalls-of-the-global-minimum-tax.html
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