NON-TAX COMPETITION AFTER THE GLOBAL MINIMUM CORPORATE TAX: NEW INCENTIVE DYNAMICS

Globalization and digitalization have significantly expanded the operational flexibility of multinational enterprises (MNEs), intensifying competition among countries to attract investment through low corporate tax rates and preferential tax regimes. In response to the resulting erosion of tax bases, the OECD and G20 have introduced the Two-Pillar Solution, with Pillar Two establishing the Global Minimum Corporate Tax (GMCT). Under the GloBE rules, large MNEs are required to pay a minimum effective tax rate of 15 percent in each jurisdiction where they operate, enforced through mechanisms such as the Income Inclusion Rule (IIR), Undertaxed Payments Rule (UTPR), and Qualified Domestic Minimum Top-Up Tax (QDMTT). This framework directly constrains the attractiveness of low-tax regimes and reshapes countries’ strategies for competing for investment.

This study outlines the historical evolution of the GMCT and provides a conceptual assessment of how various categories of tax incentives may be affected by the GloBE rules. While profit- or income-based incentives appear increasingly vulnerable under the new regime, cost-based incentives and non-tax forms of support offer comparatively greater flexibility. The analysis suggests that international tax competition is shifting from rate-based competition toward competition over the design and structure of investment incentives. By examining these dynamics, the study aims to contribute to ongoing policy discussions concerning countries’ adjustment strategies in the post-GMCT environment.