We propose a methodology to estimate the impact of the 2024 global minimum tax on the effective tax rates of multinational enterprises. Using a dataset of 1,300 multinationals operating in Czechia from 2017 to 2022 (nearly 300,000 firm-country observations), we assess three main objectives of this reform: (i) increasing tax contributions, (ii) reducing profit shifting, and (iii) decreasing tax rate disparities. Our findings suggest that effective tax rates will rise significantly, increasing the average tax rate by approximately 4 percentage points and generating an additional €200 billion in revenue. This will also narrow intra-firm tax rate disparities, particularly affecting ‘internal profit centers’—affiliates with a high share of intra-firm revenue. Finally, by reducing tax rate differences across firms, the reform would result in a more equitable tax system, limiting profit-shifting opportunities for large multinationals and aligning their tax burdens more closely with smaller firms.

In 2021, the OECD announced that over 130 jurisdictions supported its “Pillar 2” proposal for a 15 percent global minimum effective tax rate for large multinational enterprises. This proposal has since been adopted unanimously by the European Union, and has come into force on 1 January 2024. We employ an event study methodology using daily 2021 stock market returns of 1.782 EU and US firms to determine how Pillar 2 announcements affected the value of firms subject to the global minimum tax, and that of their competitors. We find a significant negative impact on the stock market returns of directly affected US firms, while the impact on EU firms appears to be limited, suggesting investors in EU are less worried about the impact of future anti-tax avoidance regulations. In our current specifications, we find no conclusive evidence of a causal effect on the stock market returns of their competitors.

This paper examines the impact of the 2017 US Tax Cuts and Jobs Act (TCJA) on the investment behavior of US multinational corporations (MNCs) in Germany. The TCJA introduced substantial corporate tax changes, including a reduction in the US corporate tax rate, full expensing of certain capital expenditures (bonus depreciation), and the Global Intangible Low-Taxed Income (GILTI) provision, which altered incentives for foreign investment. Using a triple difference-in-differences framework and firm-level data on foreign-owned subsidiaries in Germany, this paper investigates whether US MNCs reallocated investment towards the US or increased tangible investment in Germany in response to the tax cut and GILTI. The findings shed light on the trade-offs between tax-motivated profit shifting and real economic activity in high-tax jurisdictions.

This paper characterizes profit shifting behaviour across the size distribution of multinational firms to evaluate the appropriate targeting of the recently introduced Global Minimum Tax (GMT). We document that the propensity to use tax haven subsidiaries increases substantially with group size. Second, we introduce a new methodology to estimate shifted profits at the group level and find an exponential group size gradient in profits shifted to tax havens. Lastly, we relate the potential tax revenue gains from the GMT to the compliance costs of MNEs and conclude that revenue gains clearly dominate compliance costs for large groups currently covered by the GMT and that potential net revenue gains from lowering the threshold are modest.