Working Paper: CEPR ID: DP16925
Authors: Niels Johannesen
Abstract: This paper studies how the global minimum tax shapes national tax policies and welfare in a formal model of international tax competition with heterogeneous countries. The net welfare effect is generally ambiguous from the perspective of non-havens. On the one hand, the global minimum tax raises their welfare by curbing profit shifting, which boosts government revenue. One the other hand, it lowers their welfare by increasing equilibrium tax rates in havens, which transfers real resources from non-haven firms to haven governments. The net welfare effect is unambiguously positive when the global minimum rate is so high that profit shifting ends.
Keywords: Profit Shifting; International Taxation; Global Minimum Tax; Tax Avoidance; Multinational Firms
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| global minimum tax (F38) | welfare in non-havens (I39) |
| global minimum tax (F38) | tax payments from firms shifting profits (H32) |
| equilibrium tax rates in havens (H26) | welfare in non-havens (I39) |
| global minimum tax (F38) | equilibrium tax rates in havens (H26) |
| equilibrium tax rates in havens (H26) | total tax liabilities of firms (H32) |
| profit shifting sensitivity to tax rates (H32) | welfare effect (D69) |
| global minimum tax rate (F38) | profit shifting (H26) |
| global minimum tax (F38) | abandonment of profit shifting (H26) |