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1 Daniel Bunn, et al., Anti-Avoidance Policies in a Pillar Two World 1 (2023)

handle is hein.taxfoundation/antipillar0001 and id is 1 raw text is: * TAX FOUNDATION Anti-Avoidance Policies in a Pillar Two World Daniel Bunn Alan Cole Alex Mengden President and CEO Senior Economist Global Policy Analyst October 2023 Key Findings • The global minimum tax agreement known as Pillar Two is intended to curb profit shifting. However, OECD countries already have a variety of mechanisms in place that seek to prevent base erosion and profit shifting by multinational corporations. • Tax systems generally face tradeoffs between exempting foreign activity from domestic taxation, protecting the domestic corporate tax base from profit shifting, and creating a simple system. • Pillar Two limits the ability of countries to compete for shifting profits with low statutory rates. However, countries will still have the incentive and ability to attract profit shifting through other means. As a result, base erosion measures may still be necessary. • Pillar Two implementation risks of adding a rigid but relatively ineffective layer to the already complex series of anti-avoidance measures, or alternatively, becoming a project without end and subject to constant litigation. • Policymakers should identify overlapping anti-avoidance measures and aim to reform or eliminate redundant policies to avoid ever-increasing complexity for cross-border tax rules. The Tax Foundation is the world's leading nonpartisan tax policy 501(c)(3) nonprofit. For over 80 years, our mission has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. TAX FOUNDATION 1325 G STREET, NW, SUITE 950, WASHINGTON, DC 20005 202-464-6200 1 taxfoundation.org