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Pareto-Improving Minimum Corporate Taxation
Author:
Mr. Shafik Hebous
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and
Mr. Michael Keen
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 250
Language:
English
Publication Date:
22 Oct 2021
DOI:
https://doi.org/10.5089/9781557756183.001
ISBN:
9781557756183
ISSN:
1018-5941
Pages:
23
Keywords:
Tax Competition; Minimum Taxation; Corporate Tax Reform; International Taxation; competition game; policy objective; corporate tax reform; best response; country benefit; residence country; Corporate income tax; Competition; Tax avoidance; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The recent international agreement on a minimum effective corporate tax rate marks a profound change in global tax arrangements. The appropriate level of that minimum, however, has been, and remains, extremely contentious. This paper explores the strategic responses to a minimum tax, which—the policy objective being to change the rules of tax competition game--—are critical for assessing the design and welfare impact of, and prospects for, this fundamental policy innovation. Analysis and calibration plausibly suggest sizable scope for minima that are Pareto-improving, benefiting low as well as high tax countries, over the uncoordinated equilibrium.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund