IDEAS home Printed from https://ideas.repec.org/p/fau/wpaper/wp2024_39.html
   My bibliography  Save this paper

Global Minimum Tax and Profit Shifting

Author

Listed:
  • Tomas Boukal

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia)

  • Petr Jansky

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia)

  • Miroslav Palansky

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia & Tax Justice Network, London, United Kingdom)

Abstract

We develop a methodology to decompose the tax revenue impact of the global minimum tax introduced in 2024 into several components and quantify its potential impact on profit shifting. We apply it to 34 thousand multinational-country observations from tax returns, financial statements and country-by-country reports of all multinationals active in Slovakia. We find that the global minimum tax has the potential to decrease profit shifting by most multinationals, which are on average likely to pay higher effective tax rates in most countries worldwide post-reform. We find that Slovak corporate tax revenues will increase by 4%, with half of the increase due to its minimum top-up taxes. The other half of the increase is corporate income tax on profits that will no longer be shifted out of the country. We expect the global minimum tax to target 49% of previously shifted profits.

Suggested Citation

  • Tomas Boukal & Petr Jansky & Miroslav Palansky, 2024. "Global Minimum Tax and Profit Shifting," Working Papers IES 2024/39, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2024.
    • Handle: RePEc:fau:wpaper:wp2024_39
    as

    Download full text from publisher

    File URL: https://ies.fsv.cuni.cz/en/global-minimum-tax-and-profit-shifting
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    global minimum tax; profit shifting; multinationals; tax avoidance;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fau:wpaper:wp2024_39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalie Svarcova (email available below). General contact details of provider: https://edirc.repec.org/data/icunicz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.