IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/11090.html
   My bibliography  Save this paper

Effective Tax Rates, Firm Size and the Global Minimum Tax

Author

Listed:
  • Pierre Bachas
  • Anne Brockmeyer
  • Roel Dom
  • Camille Marine Semelet

Abstract

This paper documents new facts on corporate taxation and the revenue potential of corporate minimum taxes, leveraging firm-level tax returns from 16 countries. First, effective tax rates follow a humped-shaped pattern with firm size: small firms benefit from reduced rates, while large firms take up tax incentives, leaving mid-sized firms with the highest effective rates. On average, the effective tax rate for the largest 1 percent of firms is 2.2 percentage points lower than the average effective tax rate for the top decile of firms. Second, although statutory tax rates are above 15 percent in all sample countries, over a quarter of top firms face an effective rate below 15 percent, challenging the simple tax haven versus non-haven dichotomy. Third, a simple 15 percent domestic minimum tax for the top 1 percent firms could raise corporate taxes by 14 percent on average across countries, absent behavioral responses. In contrast, the global minimum top-up tax would only raise a quarter of this revenue due to its generous deductions and smaller number of firms in scope.

Suggested Citation

  • Pierre Bachas & Anne Brockmeyer & Roel Dom & Camille Marine Semelet, 2025. "Effective Tax Rates, Firm Size and the Global Minimum Tax," Policy Research Working Paper Series 11090, The World Bank.
  • Handle: RePEc:wbk:wbrwps:11090
    as

    Download full text from publisher

    File URL: https://documents.worldbank.org/curated/en/099225003242534123/pdf/IDU-7e2f876b-e749-4eca-b00a-b74846fd7984.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Adhikari, Ajay & Derashid, Chek & Zhang, Hao, 2006. "Public policy, political connections, and effective tax rates: Longitudinal evidence from Malaysia," Journal of Accounting and Public Policy, Elsevier, vol. 25(5), pages 574-595.
    2. Giulia Mascagni & Andualem Mengistu, 2019. "Effective tax rates and firm size in Ethiopia," Development Policy Review, Overseas Development Institute, vol. 37(S2), pages 248-273, July.
    3. Pierre Bachas & Matthew Fisher-Post & Anders Jensen & Gabriel Zucman, 2022. "Globalization and Factor Income Taxation," Working Papers halshs-03693211, HAL.
    4. Nicodeme, Gaetan, 2002. "Sector and size effects on effective corporate taxation," MPRA Paper 15781, University Library of Munich, Germany.
    5. Marco Carreras & Purnachandar Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series 162, World Institute for Development Economic Research (UNU-WIDER).
    6. Marco Carreras & Chandu Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series wp-2017-162, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maya GOLDMAN & Ingrid WOOLARD & Jon JELLEMA, 2020. "The Impact of Taxes and Transfers on Poverty and Income Distribution in South Africa 2014/2015," Working Paper 148aae17-521b-428b-85de-b, Agence française de développement.
    2. Stamatopoulos, Ioannis & Hadjidema, Stamatina & Eleftheriou, Konstantinos, 2019. "Explaining corporate effective tax rates: Evidence from Greece," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 236-254.
    3. Kamel Naoui & Abdelkader Kasraoui, 2020. "Post Tax Reform and Corporate Effective Tax Rate: Evidence from Tunisia," International Review of Management and Marketing, Econjournals, vol. 10(3), pages 1-6.
    4. repec:ptu:bdpart:e202203 is not listed on IDEAS
    5. Maya Goldman & Ingrid Woolard & Jon Jellema, 2021. "The Impact of Taxes and Transfers on Poverty and Income Distribution in South Africa 2014/15," Commitment to Equity (CEQ) Working Paper Series 106, Tulane University, Department of Economics.
    6. Stamatopoulos, Ioannis & Hadjidema, Stamatina & Eleftheriou, Konstantinos, 2016. "Explaining Corporate Effective Tax Rates Before and During the Financial Crisis: Evidence from Greece," MPRA Paper 73787, University Library of Munich, Germany.
    7. Tang, Xuesong & Lin, Yan & Peng, Qing & Du, Jun & Chan, Kam C., 2016. "Politically connected directors and firm value: Evidence from forced resignations in China," The North American Journal of Economics and Finance, Elsevier, vol. 37(C), pages 148-167.
    8. Zhang, Cui, 2017. "Political connections and corporate environmental responsibility: Adopting or escaping?," Energy Economics, Elsevier, vol. 68(C), pages 539-547.
    9. Tao Zeng, 2016. "Corporate Social Responsibility, Tax Aggressiveness, and Firm Market Value," Accounting Perspectives, John Wiley & Sons, vol. 15(1), pages 7-30, March.
    10. Karen Crabbé & Karolien De Bruyne, 2013. "Taxes, Agglomeration Rents and Location Decisions of Firms," De Economist, Springer, vol. 161(4), pages 421-446, December.
    11. Zengji Song & Abraham Nahm & Zongyi Zhang, 2015. "The value of partial state ownership in publicly listed private sector enterprises: evidence from China," Post-Communist Economies, Taylor & Francis Journals, vol. 27(3), pages 336-353, September.
    12. Wang, Xu & Deng, Shengliang & Alon, Ilan, 2021. "Women executives and financing pecking order of GEM-listed companies: Moderating roles of social capital and regional institutional environment," Journal of Business Research, Elsevier, vol. 136(C), pages 466-478.
    13. Lazar Sebastian, 2015. "Tax Payments Determinants In Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 749-756, July.
    14. Tom Moerenhout & Joonseok Yang, 2022. "Tax Evasion Attitudes of Small Firms in Low‐ and Middle‐income Countries: Evidence from Nigeria," Development Policy Review, Overseas Development Institute, vol. 40(6), November.
    15. Matthew Fisher-Post & Amory Gethin, 2023. "Government Redistribution and Development Global Estimates of Tax and Transfer Progressivity 1980-2019," Working Papers halshs-04423529, HAL.
    16. Umaima Imran, 2025. "Misallocation of Resources, Political Connections and External Flows," LCERPA Working Papers jc0151, Laurier Centre for Economic Research and Policy Analysis, revised Jan 2025.
    17. Mariarosaria Agostino & Sabrina Ruberto, 2024. "Credit rationing and SMEs’ environmental performance in transition and developing countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 16627-16656, July.
    18. Wang, Fangjun & Xu, Luying & Zhang, Junrui & Shu, Wei, 2018. "Political connections, internal control and firm value: Evidence from China's anti-corruption campaign," Journal of Business Research, Elsevier, vol. 86(C), pages 53-67.
    19. Nadja Dwenger & Viktor Steiner, 2008. "Effective Profit Taxation and the Elasticity of the Corporate Income Tax Base: Evidence from German Corporate Tax Return Data," Discussion Papers of DIW Berlin 829, DIW Berlin, German Institute for Economic Research.
    20. Zhang, Min & Liu, Yaosong & Xie, Lu & Ye, Tingting, 2017. "Does the cutoff of “red capital” raise a red flag? Political connections and stock price crash risk," The North American Journal of Economics and Finance, Elsevier, vol. 39(C), pages 89-109.
    21. López-Iturriaga, Félix J. & Santana Martín, Domingo Javier, 2019. "The payout policy of politically connected firms: Tunnelling or reputation?," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:11090. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.