Why the US Treasury's call for a global minimum tax is unfair to developing economies
The US Treasury's call for a global minimum tax has received global endorsement. It is being proposed that the race to the bottom for corporate tax rates be reversed. While in principle it is sound policy to remove preferential rate structures for companies, one must inquire into what stakeholders mean when they say that a company must pay its fair share of taxes, and more so to whom.
The Base Erosion and Profit Shifting (BEPS) programme was initiated in 2013 to curb practices that allowed companies to reduce their tax liabilities by exploiting loopholes in the tax law. Big tech companies, for instance, were able to plan activities such that physical presence was not necessary to operate in large markets such as India and profits could be relatively easily relocated to low-tax jurisdictions through financial manoeuvres.