A Game-theoretic Analysis of Global Minimum Tax Design : Country-by-Country v. Global Averaging

This paper constructs and analyzes a rudimentary game-theoretic model to better understand the policy choice between a global minimum tax regime that operates country-by-country and one that operates based on MNEs’ global average tax rates. The paper’s findings run counter to the consensus view. That view favors a country-by-country regime for two kinds of reasons: it collects more tax liability from MNEs; and it is more effective in preventing harmful tax competition among taxing jurisdictions. The model in this paper suggests that a global average regime is superior to a country-by-country regime on both scores.See also Chris William Sanchirico, Should a Global Minimum Tax be Country-by-Country?, Tax Notes Federal, Vol. 175, pp. 449-458 (April 25, 2022)