Expected burdens of the global minimum tax: firm evidence

Abstract We provide firm-level evidence on expected tax burdens under the OECD’s Pillar Two minimum tax using 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 in-scope firms to assess and disclose material tax liabilities under the global minimum tax (GMT), allowing us to study the distribution of reported GMT liabilities 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. Cross-sectional 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 cross-country differences remain, despite harmonized rules and accounting standards. These differences are positively associated with our country-level measure of tax enforcement intensity. Our results show that reported GMT liabilities are considerably less uniform across firms and jurisdictions than the common legal framework might suggest.