Global minimum corporate tax rate

[7] In 2019, the OECD, an intergovernmental association of mostly rich countries, began proposing a global minimum corporate tax rate.

It argued that the increasing global economic significance of digital products and services requires an update to taxation rules to prevent companies from shifting profits to jurisdictions with a lower corporate tax rate.

[8] The OECD formed a group, called Inclusive Framework,[9] that has since been exploring a minimum tax rate among its member states.

[10] In May 2019, Germany and France published a joint proposal for a global minimum effective tax rate named Pillar Two, with the goal of stopping the race to the bottom.

[11] This Franco-German proposal received wide international support, and both the then-IMF Managing Director Christine Lagarde as well as the then-OECD Secretary-General Angel Gurría endorsed it.

[11] In 2020, the group's then 137 member states called the blueprint for Pillar Two "a solid basis for a systemic solution that would address remaining base erosion and profit shifting (BEPS) challenges".

[13] Liu Kun, China's Minister of Finance, said in 2021 that the planned agreement would help create a "fair and sustainable" international tax system.

[14] On 1 July 2021, 130 countries backed an OECD plan to set a global minimum corporate tax rate of 15 per cent.

[15] On 8 October 2021, the EU members Republic of Ireland, Hungary, and Estonia agreed to the OECD plan under the condition that the 15% tax rate will not be raised.

This includes guidance on the recognition of the United States’ minimum tax, known as the Global Intangible Low-Taxed Income (GILTI), under the GloBE Rules.

It also provides guidance on the design of Qualified Domestic Minimum Top-up Taxes and on the scope, operation, and transitional elements of the GloBE Rules.

This amendment was approved by popular vote on 18 June 2023, which gave the Federal Council of Switzerland the authority to implement minimum taxation by ordinance.

[42] Christian Hallum, tax policy lead at Oxfam, called the OECD initiative a "tax-haven reshuffle", which could normalise minimal taxation and exceptions to it.