Advanced Finance

Paper details:

This is a fact based opinion piece/discussion post. Please reference attached article, attached powerpoints and/or any other credible online source

Investopedia provides a decent coverage of the issues around the OECD and G20-led process for introduction of the Global Corporate Minimum Tax (GCMT): And in October 2021, this process of global tax reforms entered a new round with OECD accelerating Pillar 2 framework for tax systems coordination across the borders.

Yet, “the OECD’s annual Corporate Tax Statistics, released July 29, 2021 reports that the statutory corporate income tax rate in 111 reviewed jurisdictions declined from an average of 28.3% in 2000 to 20.0% in 2021 – a nearly 30% drop. At the same time, new country-by-country reporting data included in the statistics show that profits continue to be disproportionately reported in “investment hubs” and zero-tax jurisdictions.” (See

Companies, especially larger multinational corporations (MNCs), exist, in part to minimize the tax costs exposures in their operations. Tax systems, their complexities, ambiguities and uncertainties around their evolution, in turn, shape the way companies evolve (consider multinational corporations that shift assets, operations and strategic development and investment decisions across the globe to reduce their tax bills).

Q1: How do you think introduction of a GCMT will influence over time the changes in how companies organize, form and develop? In other words, how will GCMT reshape the modern organization of the firm?
Q2: How, in your opinion, will introduction of GCMT influence the nature of domestic competition within the US (i.e. Do you expect GCMT make ti easier for smaller and younger challenger companies to compete against larger MNCs?)

Note 1: These are highly speculative questions, given the level of ambiguity and uncertainty around GCMT and its effectiveness, so feel free to speculate. Similarly, tax arrangements are not the only factor that is altering modern firms/companies. Technological revolution, demographics of aging and sequences of systemic crises are also reaping these. Feel free to think about how these factors are linked to and help drive evolution of the firms alongside with GCMT.

Note 2: I am also enclosing a more easy-to-read discussion of the OECD tax proposals published recently in the Foreign Affairs magazine (see PDF).

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