The silent giant: China’s inaction on global minimum tax legislation

Abstract The Global Minimum Tax (GMT) has become a focal point in international tax policy, yet China’s response to this development has been notably absent. Despite its political commitment to the GMT, China has yet to take any legislative steps towards its implementation. This article first examines the reasons behind China’s inaction on the GMT legislation from economic, political, and legal perspectives. It finds that the GMT’s limited impact on Chinese tax revenue is the decisive factor. It then explores the strategies that China can adopt in response to the GMT. In the short term, China can continue to adopt a wait-and-see strategy. If it chooses to respond to the GMT, enhancing existing tax laws to mitigate top-up tax revenue loss is a more cost-effective choice than adopting the GMT legislation based on the OECD model. Finally, from a broader perspective, this article reflects on China’s role in global tax governance. As the unilateralism approach of the USA during Donald Trump’s second term poses challenges to the multilateral tax system, China should transform from a silent observer into an active contributor in order to maintain the stability of the multilateral tax system.