No. 230: Expected Burdens of the Global Minimum Tax: Firm Evidence

We provide firm-level evidence on expected tax burdens under the OECD’s Pillar Two minimum tax using hand-collected financial statement disclosures from listed multinational groups headquartered in countries where Pillar Two has already taken effect. Our setting exploits a common reporting framework that requires inscope firms to assess and disclose material tax liabilities under the global minimum tax, allowing us to study the early incidence of the reform across firms and jurisdictions. We find that expected burdens are highly concentrated: although most firms disclose exposure to Pillar Two, only 22.5% recognize positive global minimum tax liabilities, and a few firms account for much of the total reported burden. Crosssectional variation in global minimum tax liabilities is strongly associated with firm exposure to low-taxed foreign income and a group’s international presence. At the same time, substantial crosscountry differences remain, despite harmonized rules and accounting standards. These differences are positively associated with country-level tax enforcement. Our results suggest that the early expected incidence of Pillar Two is considerably less uniform than its common legal framework might suggest.