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The use of accounting information in the tax base in the Pillar 2 global minimum tax: a discussion of the rules, potential problems, and possible alternatives

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  • Michelle Hanlon

Abstract

In this paper, I provide a high‐level, non‐technical review of how accounting information is used in Pillar 2 and what this means for the tax base. In addition, I discuss potential problems of using accounting data explicitly in a minimum tax and then, specifically, as the starting point for the computation of the income measures in Pillar 2. I then discuss several alternative solutions that may be simpler – or at least no more complex – and, importantly, pose fewer problems in terms of the quality of financial accounting information and the information available to capital markets.

Suggested Citation

  • Michelle Hanlon, 2023. "The use of accounting information in the tax base in the Pillar 2 global minimum tax: a discussion of the rules, potential problems, and possible alternatives," Fiscal Studies, John Wiley & Sons, vol. 44(1), pages 37-52, March.
    • Handle: RePEc:wly:fistud:v:44:y:2023:i:1:p:37-52
    DOI: 10.1111/1475-5890.12320
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    References listed on IDEAS

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    1. Thomas Tørsløv & Ludvig Wier & Gabriel Zucman, 2023. "The Missing Profits of Nations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(3), pages 1499-1534.
    2. Michelle Hanlon & Michelle Nessa, 2023. "The Use of Financial Accounting Information in the OECD BEPS 2.0 Project: A Discussion of the Rules and Concerns," National Tax Journal, University of Chicago Press, vol. 76(1), pages 193-232.
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    8. Kimberly A. Clausing, 2016. "The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 905-934, December.
    9. Thomas Wright & Gabriel Zucman, 2018. "The Exorbitant Tax Privilege," NBER Working Papers 24983, National Bureau of Economic Research, Inc.
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