OECD says global minimum tax boosted revenue, not job losses
OECD Report on Global Minimum Tax Impact
(Corrects date in the first sentence to Wednesday not Tuesday.)
Overview of the Global Minimum Tax
PARIS, July 15 (Reuters) - Countries applying a global minimum tax on multinational companies saw corporate tax revenues rise without a corresponding loss of jobs or investment, the Organisation for Economic Co-operation and Development said on Wednesday.
The global minimum tax was designed to curb a decades-long race to the bottom in corporate taxation by allowing countries to levy top-up taxes when profits are taxed below 15% elsewhere, reducing the benefits of booking profits in low-tax jurisdictions.
More than 60 countries and territories have implemented the rules, while many others are preparing to do so.
Revenue Impact and Implementation
Government Revenue Increases
The Paris-based OECD estimated that the tax increased government revenue by €79 billion to €109 billion ($90 billion to $124 billion) in its first year, equivalent to 2.4% to 3.4% of global corporate income tax receipts.
Scope and Coverage
The study examined how companies responded after the introduction in 2024 of the global minimum tax, a cornerstone of international efforts to overhaul corporate taxation and deter large multinational groups from shifting profits to low-tax jurisdictions.
Applying to multinational groups with annual revenue above €750 million, the tax aims to ensure companies face an effective tax rate of at least 15% wherever they operate.
Analysis of Corporate Response
Comparison of Firms
To identify the impact of the reform, the OECD compared firms just above and below the revenue threshold. It found that companies covered by the rules experienced higher effective tax rates, while there was limited evidence of any effect on investment or employment.
Methodology
Unlike previous OECD estimates, which relied on modelling, the study was based on observed company behaviour following implementation of the rules.
Limitations and Further Context
First-Year Revenue Estimate
The revenue estimate is below the OECD's pre-implementation projection that the reform could eventually generate an additional $155 billion to $192 billion a year in corporate tax revenue worldwide, reflecting that the study covers only the first year of implementation.
Exemptions and Agreements
U.S. Multinational Exemption
Since the study covers only 2024, it does not reflect a subsequent agreement negotiated by the Trump administration that exempted U.S.-headquartered multinationals from key elements of the regime through a separate "side-by-side" arrangement that recognises the United States' existing minimum tax.
($1 = 0.8745 euros)
(Reporting by Leigh Thomas; Editing by Aurora Ellis)
