A global minimum tax: An end to the multinationals 'racing to the bottom'?

Globalisation and the increasing trend for enterprises to set up operations abroad have led to cases of tax avoidance or tax optimisation. In an effort to control this and provide governments with missing tax revenues, in 2013, the OECD began a series of initiatives to introduce a global minimum tax which has culminated with the 2021 GloBE agreement on a 15% tax for MNCs. This is intended to come into force in 2023 for multinationals earning revenue of more than USD820 million per annum. However, while creating opportunities, the global minimum tax also poses challenges for countries. This insight explores these challenges and the possible reactions of large multinationals, home countries, and host countries to the global minimum tax.