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> View this email in your browser > <https://mailchi.mp/law/perspective-375?e=299cea0792> > > 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看: > https://ccsi.columbia.edu/content/columbia-fdi-perspectives > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9fa9a577f2&e=299cea0792> > . > *Columbia FDI Perspectives* > Perspectives on topical foreign direct investment issues > Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) > Managing Editor: Matthew Conte ([log in to unmask]) > > *The Columbia FDI Perspectives are a forum for public debate. The views > expressed by the authors do not reflect the opinions of CCSI or our > partners and supporters.* > > No. 375 January 22, 2024 > *The global corporate minimum tax and MNE home countries* > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=5cdbdfd2c8&e=299cea0792> > by > Reuven Avi-Yonah* <#m_5241230584647887759_m_892971939182946647__edn1> > > In October 2021, over 135 countries reached a political agreement > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=005935ae78&e=299cea0792> > to enact a 15% global minimum corporate tax for MNEs with annual revenues > over 750 million Euros. This *Perspective* explores the implications of > this tax for the *home countries* of these MNEs. The tax applies to about 8,000 > MNEs > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=388c4326f1&e=299cea0792> > from both developed and developing countries. > > The tax is embodied in Pillar Two of the G20/OECD/Inclusive Forum Base > Erosion and Profit Shifting > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=f6cf5230fc&e=299cea0792> > project. MNEs that meet the revenue-threshold are subject to the tax > regardless of where they are headquartered or operating. Since almost > one-third > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=3c7f627ed8&e=299cea0792> > of global FDI outflows (2022) were from developing countries, a number of > these MNEs are headquartered there. > > Pillar Two has three components, in order of precedence: the Qualified > Domestic Minimum Top-up Tax (Top-up Tax), the Income-Inclusion Rule and the > Undertaxed Profits Rule. > > - Countries that currently have an effective corporate tax rate below > 15% may adopt a Top-up Tax, designed to bring their domestic tax rate up to > 15% (calculated based on local accounting rules). For example, Switzerland > has recently adopted a Top-up Tax by popular referendum. The Top-up Tax > turns off the application of the Income-Inclusion Rule and the Undertaxed > Profits Rule for the operations of the MNEs in adopting countries. > - The Income-Inclusion Rule permits MNEs’ home countries to impose a > Top-up Tax on their MNEs at a minimum rate of 15% if host countries where > foreign affiliates operate do not have a Top-up Tax. > - If there is no Top-up Tax or Income-Inclusion Rule, host countries > of MNEs may impose the Undertaxed Profits Rule on their portion of the > MNEs’ profits, to increase the overall effective tax rate of the MNEs to > 15%. This Rule is the most controversial part of Pillar Two because it has > no precedent in existing international tax law (unlike the Top-up Tax > (which follows existing law in allowing host countries to tax locally > derived income) and the Income-Inclusion Rule (which follows familiar > controlled foreign corporation rules such as the US Global Intangible > Low-Taxed Income approach)). This has led critics > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e2b28980b1&e=299cea0792> > to argue > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=553cb9911c&e=299cea0792> > that it violates tax treaties and arguably customary international law. In > the US, the Undertaxed Profits Rule has been criticized > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e27c3f7216&e=299cea0792> > as taking away Congress’ ability to reduce the domestic tax rate of US > based MNEs below 15%. The OECD responded recently by adopting a two-year > safe harbor that will shield US MNEs’ domestic income from the Undertaxed > Profits Rule. > - A country could be forced into arbitration under an international > investment agreement (IIA) if it applied a Top-Up Tax that eliminates or > reduces a preferential tax regime granted to an investor. To avoid this, > the host country may grant the investor refundable credits to reduce the > Top-Up Tax. However, investors may be reluctant to invoke the IIA if an > arbitration award triggers the Income Inclusion Rule or the Undertaxed > Profits Rule in a third country. > > The most important policy question facing home countries is whether to > adopt an Income-Inclusion Rule. The advantage of adopting this Rule is > that, to the extent host countries do not adopt a Top-up Tax when they have > a tax rate below 15%, home countries gain additional revenue by collecting > the difference between the taxes paid in host countries and the 15% global > minimum tax. > > Since all home countries are subject to the same rules, there is no > competitive disadvantage for their MNEs, as all home countries can do the > same. Traditionally, the argument against taxing home country MNEs on > worldwide income has been that it puts them at a competitive disadvantage > compared to MNEs from other home countries that do not tax such income. But > if all home countries tax at 15%, there is no competitive disadvantage. > > It has been argued > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=d708de794f&e=299cea0792> > that, if all host countries adopt a Top-up Tax, home countries will have no > incentive to adopt an Income-Inclusion Rule. But this criticism > misunderstands the purpose of Pillar Two, which is not to maximize revenue. > The main purpose of Pillar Two is to ensure that every large MNE is subject > to at least 15% taxation of its profits, meaning the shareholders of the > MNEs are subject to some current taxation without a sale of their shares. > Another purpose is to enable home countries to grant tax incentives to > their MNEs that reduce the domestic tax rate to 15% (or lower through > refundable credits) without worrying that the MNEs will ignore the > incentive by shifting profits to other countries. > > Pillar Two complements the trend to reduce the negative impact of > unfettered globalization on labor, and it protects the ability of home > countries to finance a robust social safety net. Home countries should > adopt the Income-Inclusion Rule—and that includes the US, which last year > failed to adapt its Global Intangible Low-Taxed Income approach to Pillar > Two. Consequently, US-based MNEs could be subject to the Undertaxed Profits > Rule adopted last year by the EU and other host countries once the > temporary safe harbor expires. Perhaps that outcome will induce the US, > other developed home countries and developing home countries to adopt the > Income-Inclusion Rule. > > ------------------------------ > * <#m_5241230584647887759_m_892971939182946647__ednref1> Reuven Avi-Yonah > ([log in to unmask]) is the Irwin I. Cohn Professor of Law at the > University of Michigan. The author wishes to thank Lorraine Eden, Jeffrey > Owens and Leidson Rangel for their helpful peer reviews. > *The material in this Perspective may be reprinted if accompanied by the > following acknowledgment: “Reuven Avi-Yonah, ‘**The global corporate > minimum tax and MNE home countries,**’ Columbia FDI Perspectives, No. > 375, January 22, 2024. Reprinted with permission from the Columbia Center > on Sustainable **Investment (*http://ccsi.columbia.edu > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ef77122c99&e=299cea0792>*).” > A copy should kindly be sent to the Columbia Center on Sustainable > Investment at *[log in to unmask] <[log in to unmask]> > For further information, including information regarding submission to the > *Perspectives*, please contact: Columbia Center on Sustainable > Investment, Matthew Conte, [log in to unmask] > > *Most recent Columbia FDI Perspectives* > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c844b9129b&e=299cea0792> > > > - No. 374, Catharine Titi, ‘Why public policy exceptions have not > delivered and how to make them more effective > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=53e8559323&e=299cea0792>,’ > *Columbia FDI Perspectives*, January 8, 2024 > - No. 373, Bamituni Etomi Abamu, ‘Reducing the reliance on global > value chains by strengthening backward linkages > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b384aa017c&e=299cea0792>,’ > *Columbia FDI Perspectives*, December 26, 2023 > - No. 372, Fabrizio De Benedetto, ‘Indirect FDI under EU FDI > regulation in times of war: is the anti-circumvention clause enough? > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=dea9b7e16b&e=299cea0792>’ > *Columbia FDI Perspectives*, December 11, 2023 > > *All previous FDI Perspectives are available at > https://ccsi.columbia.edu/content/columbia-fdi-perspectives > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=d8b9e9a87a&e=299cea0792>* > . > > *Other relevant CCSI news and announcements* > > - *Applications are now open* for our 2024 virtual Executive Training > Program on Sustainable Investments in Agriculture > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ff91fc4680&e=299cea0792>, > which will be held from May 7-17, 2024. The interdisciplinary program > explores challenges and solutions for advancing sustainable investments in > agriculture. It includes asynchronous and synchronous components, including > short and interactive live sessions dedicated to engagement with course > lecturers and participants from around the world. Applications will be > considered on a rolling basis until March 15, 2024. *For more > information, and to apply, visit our website > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9977dd25e4&e=299cea0792>.* > > Karl P. Sauvant, Ph.D. > Senior Fellow > Columbia Center on Sustainable Investment > Columbia Law School - Columbia Climate School > *Copyright © 2024 Columbia Center on Sustainable Investment (CCSI), All > rights reserved.* > [log in to unmask] > > *Our mailing address is:* > Columbia Center on Sustainable Investment (CCSI) > Columbia Law School - Columbia Climate School, Columbia University > 435 West 116th Street > New York, NY 10027 > > Add us to your address book > <https://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> > > > unsubscribe from this list > <https://columbia.us6.list-manage.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&e=299cea0792&c=c23863a4ef> > update subscription preferences > <https://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=299cea0792&c=c23863a4ef> > > > [image: Email Marketing Powered by Mailchimp] > <http://www.mailchimp.com/email-referral/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=referral_marketing&aid=ab15cc1d53&afl=1> > -- *Karl P. Sauvant, PhD* *Senior Fellow* *Columbia Center on Sustainable Investment* Columbia Law School, Columbia University 435 West 116th St., Rm. JGH 825, New York, NY 10027 | p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | w: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "How to Get the Best Deal for Massive FDI Incentives <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4616026>", "The New WTO Investment Facilitation for Development Agreement <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4531684>", "The Limits of Capacity Building for Investment Contract Negotiations <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4474456>", "Establishing an Advisory Centre on International Investment Law: Key Challenges Ahead <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4389689>", *Investment Facilitation for Development: A Toolkit for Policy Makers. Second Edition <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830031>,* "Agenda for Practice-oriented Research <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4103768>", "How Would a Future WTO Agreement on Investment Facilitation for Development Encourage Sustainable FDI Flows, and How Could it be Further Strengthened? <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4084032>”, "Green FDI: Encouraging Carbon-neutral Investment <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3943705>", "More Attention to Policies! Improving the Distribution of FDI Benefits <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3818974>", "Facilitating Sustainable FDI in a WTO Investment Facilitation Framework: Four Concrete Proposals <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3496967>", "An Inventory of Concrete Measures to Facilitate the Flow of Sustainable FDI: What? Why? How? <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3739179>", are available at https://ssrn.com/author=2461782 . ____ AIB-L is brought to you by the Academy of International Business. For information: http://aib.msu.edu/community/aib-l.asp To post message: [log in to unmask] For assistance: [log in to unmask] --- You must be an active AIB member to post to AIB-L . AIB-L has a moderator which checks messages for basic relevance. However, AIB does not edit or screen messages for accuracy or reliability of content. All subscribers are recommended to perform their own due-diligence before responding to any requests or calls. AIB accepts no liability for the content of this email, or for the consequences of any actions taken on the basis of the information provided.