MNE Responses to the Global Minimum Tax

• In Event: Minimum Tax Regimes and Tax Planning

Abstract

The Global Minimum Tax (GMT), agreed in 2021 and implemented from 2024, ensures that large MNEs are subject to a 15% minimum effective tax rate (ETR), regardless of where they operate. This paper uses a Difference-in-Differences framework to ask whether MNEs reacted in anticipation to the GMT by increasing ETRs, or by changing the level and structure of real activity. Preliminary evidence using Orbis data at the group level does not seem to indicate strong real anticipatory responses in terms of employment or investment. However, the evidence on ETRs is mixed. Future iterations of the analysis will also draw on firm-level CbCR data, which contains complete and high-quality data on the global activities of large MNEs, to study more granular responses at the level of MNE jurisdictions as well as potential re-allocation responses not observable in more aggregated data.

Authors

• Tom Zawisza, OECD

• Felix Hugger, OECD