A Study On Global Minimum Tax Rules For BEPS Of MNEs

Since the rise of cross-border capital,labor and trade flows in the last century and the birth of MNEs,international economic activities have been constantly developing and become increasingly prosperous,and the wave of globalization has surged,boosting the vigorous development of the international economy.At the same time,in the process of pursuing profit maximization,it is also increasingly common for MNEs to implement tax base erosion and profit shifting.Especially under the rapid development of information technology,business model is constantly subverting traditions,and the values of intangible assets have increased sharply.Meanwhile,the tax avoidance strategies of MNEs have been much more clever and hidden.Not only the MNEs themselves keenly grasp the loopholes of tax rules,but also some low-tax jurisdictions actively provide them with chances to avoid tax.In these cases,the tax base erosion and profit shifting degrees of MNEs have worsened,which have an adverse impact on the tax revenue in various jurisdictions,and also hinder the fairness of competition between different enterprises This phenomenon has attracted widespread attention worldwide,and many international organizations and countries are also actively seeking solutions.In 2013,the OECD and the G20 jointly launched an action plan for base erosion and profit shifting,namely the BEPS action plan,aiming to deal with the radical tax planning of MNEs by revising and optimizing the traditional international tax rules.However,the action plan did not fully achieve the established goals,and there are still some problems leave to be solved in practice.Therefore,the OECD has launched a new “Two-pillar Action” to solve the tax challenges arising from digitalization of economy.And the Glo BE rules from “Pillar Two”,learning form the GILTI and BEAT,aim to levy the global minimum tax to solve the remaining BEPS problems.This paper takes the Apple Group as an example to analyze the ways of MNEs to achieve BEPS.In analyzing the failed responses of some relevant international organizations and countries through traditional anti-tax avoidance rules,this paper has studied the effect of applying the global minimum tax rule.In the face of the Apple Group’s aggressive tax plans,various parties are actively seeking countermeasures.Ireland has been forced by international pressure to revise its standards for resident identity.The European Commission has imposed sanctions on the advanced tax rulings signed between the Apple Group and Ireland in the name of illegal state aid.And the United States has often talked about addressing the loopholes in domestic tax laws.But these practices copying with Apple’s tax avoidance strategy based on patching traditional tax rules are unsatisfactory,and it is difficult to effectively work.Therefore,the international community needs brand new rules to better solve this problem.And the global minimum tax rule will benefit.On the basis of case analysis,this paper focuses on the global minimum tax rule in“Pillar Two”,and deeply analyzes the effectiveness and limitations of the rule.In terms of effectiveness,firstly,the rule is going to limit the base erosion and profit shifting of MNEs effectively.Secondly,the rule is going to significantly increase global fiscal revenue.By applying the income inclusion rules to MNEs,resident country can directly obtain tax revenue,which effectively protects the tax interests of the resident country.The source country can not only directly obtain the corresponding tax revenue by applying the undertaxed payment rules to MNEs,but also may indirectly increase the domestic fiscal income by reducing favorable tax rules.Thirdly,the implementation of the minimum tax rule will weaken the abilities of MNEs to conduct aggressive tax planning globally,leading to the increase in the effective tax rates of MNEs,which will help alleviate the unfair competition between enterprises due to income tax differences.Fourthly,the rule will help to end the global tax competition of “race to bottom”.At the same time,the limitations of the global minimum tax rule are also prominent.Firstly,it’s hard to apply the rule worldwide for its complexity and high requirements for tax authorities.Secondly,the global minimum tax rule safeguards the tax interests of the developed countries where the ultimate parent entity of MNEs is located and lead the unfair division of tax rights.Thirdly,in implementing the rule,the difference in effective tax rates between businesses will shrink,but this difference has not been completely eliminated.Fourthly,a uniform global minimum tax rate would weaken the effectiveness of certain preferential tax policy.Finally,based on the specific situation in China,this paper analyzes the expected impacts of the implementation of the Glo BE rules and puts forward some corresponding policy suggestions.