Global Minimum Tax

Global Minimum Tax

The Global Minimum Tax is a proposed tax framework aimed at establishing a uniform minimum corporate tax rate that multinational corporations must pay, regardless of where they operate. This initiative seeks to prevent tax base erosion and profit shifting (BEPS) by ensuring that companies pay a minimum level of tax, thereby discouraging them from relocating profits to low-tax jurisdictions.

Under this framework, jurisdictions that participate would agree on a minimum tax rate, which would apply to corporations operating within their borders. For example, if the minimum tax rate is set at 15%, a company that pays less than this rate in a low-tax country would be subject to an additional tax on the difference when operating in a participating country.

This global agreement aims to create a fairer tax environment, ensuring that countries can tax profits generated within their borders and reducing the incentive for profit shifting through tax avoidance strategies.