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Still Under-Taxing the Digital MNE? Assessing the Tax Principles of Pillar One in the BEPS Project

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  • Hikaru Ogawa

    (Faculty of Economics, The University of Tokyo)

Abstract

A new principle of international taxation that gives taxing rights on the profits of digital multinational firms (MNEs) has been proposed in Pillar One of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. This note delineates this tax principle in a simple model and points out that while the new framework allows taxation of MNEs profits that could not be taxed before, it includes incentives for excessive reductions in the corporate tax rate.

Suggested Citation

  • Hikaru Ogawa, 2021. "Still Under-Taxing the Digital MNE? Assessing the Tax Principles of Pillar One in the BEPS Project," CIRJE F-Series CIRJE-F-1161, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2021cf1161
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2021/2021cf1161.pdf
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    References listed on IDEAS

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    2. Keen, Michael & Konrad, Kai A., . "The theory of international tax competition and coordination," Chapters in Economics,, University of Munich, Department of Economics.
    3. Tibor Hanappi & Ana Cinta González Cabral, 2020. "The impact of the Pillar One and Pillar Two proposals on MNE’s investment costs: An analysis using forward-looking effective tax rates," OECD Taxation Working Papers 50, OECD Publishing.
    4. Peter Merrill, 2016. "Innovation Boxes: Beps and Beyond," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 847-862, December.
    5. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
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    Cited by:

    1. Wolfram F. Richter, 2022. "Granting Market Countries the Right to Tax Profit without Physical Nexus," CESifo Working Paper Series 9556, CESifo.

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