GLOBAL MINIMUM TAX AND THE FUTURE OF INTERNATIONAL TAX GOVERNANCE

Abstract

The implementation of a Global Minimum Tax (GMT) represents a significant development in international tax reform, aimed at addressing profit-shifting practices, reducing incentives for tax avoidance, and fostering a fairer and more transparent global tax system. This policy emerged in response to tax challenges posed by the digital economy and globalization, where multinational corporations can exploit disparities in tax rates and regulations across countries to minimize their tax liabilities. This study analyzes the role of the global minimum tax in shaping the future of international tax governance specifically regarding tax fairness, national fiscal sovereignty, cross-jurisdictional policy coordination, and the implications for developing nations. Employing a qualitative methodology, the study conducts a literature review of scholarly publications, international tax policy documents, and relevant regulations. The findings indicate that the GMT has the potential to strengthen international tax coordination, limit the benefits of shifting profits to low-tax jurisdictions, and increase tax revenue from multinational corporations. However, the policy's effectiveness hinges on consistent implementation, the readiness of tax administrations, the exchange of information, and the capacity of individual nations to align their domestic policies with the global tax framework. For developing countries, this policy offers an opportunity to bolster their revenue bases, while simultaneously presenting challenges in maintaining investment attractiveness and optimizing fiscal incentives. Consequently, the future of international tax governance requires inclusive multilateral coordination, legal certainty, transparency, and the strengthening of institutional capacity to ensure that the GMT contributes to a fairer, more effective, and sustainable global tax system.