Sanskriti Srivastava, Student at University of Petroleum and Energy Studies & Dr. Anju Pandey, Assistant Professor at University of Petroleum and Energy Studies
ABSTRACT
The development of Corporate Global Minimum Tax Rate is still in its nascent stage, except the July 10 2021 approval by G-20 nations. This developing regime stands strong ahead of its dynamic past, initializing from the Ruding Committee Report, 1992. The era of late 1990s is pertinent with respect to growth of international trade and tax being an inalienable subject from trade, has been a concern for economies ever since then.
In the wake of Covid-19, e-commerce has emerged at a rapid rate and the world has come closer. In such conditions, in order to maximize their profit, the multinational corporations tend to find ways to evade taxes. One such way is to have a physical presence in a tax heavens country and to derive revenue from a comparatively higher tax charging country. Due to lack of physical presence in revenue generating country, the domestic laws of revenue-deriving country are left behind and corporations evade tax smoothly. Thus, the majority applaud the minimum tax rate move.
While the Corporate Global Minimum Tax is seemingly promising to mitigate global tax distortions and inequities, its success is skeptical and is largely dependent upon its implementation. Most least developed countries or developing countries tend to put lower tax rates to attract maximum investment, tax being a major source of revenue for them. Harmonizing the minimum rate to as high as 15% could potentially threat the developing countries’ status’ as a fascinating investment opportunity for the investors.
This paper is divided into two parts, first, it attempts to analyze the past developments over the issue of a uniform/minimum tax rate and further evaluates the global minimum tax regime based on the stage of development and its revenue dependency over taxation.
Keywords: Global Minimum Tax, Corporate Tax, tax harmonization.
