Joseph Stiglitz | Project Syndicate | July 6, 2021

Under existing tax rules, multinational firms can escape paying their fair share of taxes by booking their income in low-tax jurisdictions, or by moving some parts of their business to these jurisdictions. Will proposed reforms deliver on their promise to boost government revenues, especially in developing countries?

It appears that the international community is moving toward what many are calling a historic agreement to set a global minimum tax rate on multinational corporations (MNCs). It’s about time – but it may not be enough.

…An agreement to establish a global minimum tax of at least 15% is a major step forward. But the devil is in the details. The current average official rate is considerably higher. It is thus possible, even likely, that the global minimum will become the maximum rate. An initiative that began as an attempt to force multinationals to contribute their fair share of taxes could yield very limited additional revenue, much lower than the $240 billion underpaid annually. And some estimates suggest that developing countries and emerging markets would also see a small fraction of this revenue.

Originally published by Project Syndicate. Read the full article here.