Pareto-Improving Minimum Corporate Taxation

Author/Editor:

Shafik Hebous ; Michael Keen

Publication Date:

October 22, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

The recent international agreement on a minimum effective corporate tax rate marks a profound change in global tax arrangements. The appropriate level of that minimum, however, has been, and remains, extremely contentious. This paper explores the strategic responses to a minimum tax, which—the policy objective being to change the rules of tax competition game--—are critical for assessing the design and welfare impact of, and prospects for, this fundamental policy innovation. Analysis and calibration plausibly suggest sizable scope for minima that are Pareto-improving, benefiting low as well as high tax countries, over the uncoordinated equilibrium.

Series:

Working Paper No. 2021/250

Subject:

Frequency:

regular

English

Publication Date:

October 22, 2021

ISBN/ISSN:

9781557756183/1018-5941

Stock No:

WPIEA2021250

Pages:

23

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