Anti-Tax Avoidance Rules and the Global Minimum Tax: Where Do We Stand?

We discuss whether the Global Minimum Tax (GMT) generates benefits beyond existing anti-avoidance rules that justify its complexity and additional costs, focusing on the European Union. We distinguish profit shifting by multinational enterprises from tax competition among governments. While the anti-tax avoidance rules of the OECD’s Base Erosion and Profit Shifting (BEPS) project predominantly target firms’ profit shifting activities, Pillar Two also targets jurisdictions’ incentives to offer low effective tax rates. We review early evidence on firms’ tax burdens, tax revenues, investment, and compliance costs. The available evidence suggests that substance-based exclusions, the 2026 Side-by-Side package, and differences in implementation deserve closer attention. Since additional tax revenues from the GMT alone do not establish a net social benefit, we call for research on where revenue accrues, how governments use it, and whether the benefits outweigh the associated costs. We propose broader simplification across Pillar Two and existing EU anti-avoidance rules.