How can the minimum global Tax assist small developing countries?

The minimum global tax, a policy designed to establish a minimum tax rate for multinational corporations across participating countries, can assist small developing countries in several ways:

1. Revenue generation: By ensuring that multinational corporations pay a minimum amount of taxes in each country they operate in, small developing countries can secure additional tax revenues. This can help fund vital public services, such as education, healthcare, and infrastructure development, ultimately contributing to their overall economic growth.
2. Tax base protection: The minimum global tax can help prevent tax base erosion and profit shifting (BEPS), where multinational corporations exploit tax loopholes and move profits to low-tax jurisdictions. By establishing a minimum tax rate, small developing countries can protect their tax base, which in turn supports their fiscal stability and growth.
3. Attracting investment: A minimum global tax can level the playing field among countries, as it reduces the incentive for multinational corporations to invest in countries solely based on low tax rates. This can encourage more equitable investment and allow small developing countries to attract investors based on other factors, such as infrastructure, workforce, and market potential.
4. Reducing tax competition: A minimum global tax can reduce harmful tax competition among countries, which often leads to a race to the bottom in terms of lowering tax rates to attract foreign investment. By reducing this competition, small developing countries can focus on other aspects of their economic policies, such as improving the business environment, without compromising their tax revenues.
5. Enhancing global cooperation: The implementation of a minimum global tax requires international cooperation and coordination. By participating in such initiatives, small developing countries can strengthen their ties with other nations, gain valuable insights and technical assistance, and work together to tackle common challenges, such as tax evasion and avoidance.
6. Improved tax administration: Implementing a minimum global tax often requires countries to modernize and strengthen their tax administration systems. Small developing countries can benefit from this process by enhancing their capacity to collect taxes, improving transparency, and fostering greater compliance among taxpayers.

While the minimum global tax has the potential to assist small developing countries in these ways, it is essential to ensure that the tax rate is set at a level that is beneficial for all participating nations, taking into account the unique economic circumstances and development goals of each country.

About the Author

Dr. Dawkins Brown is the Executive Chairman of Dawgen Global , an integrated multidisciplinary professional service firm .
Dr. Brown earned his Doctor of Philosophy (Ph.D.) in the field of Accounting, Finance and Management
He has over Twenty Six (26) years experience in the field of Audit, Accounting, Taxation, Finance and management . Starting his public accounting career in the audit department of a “big four” firm (Ernst & Young), and gaining experience in local and international audits, Dr. Brown rose quickly through the senior ranks and held the position of Senior consultant prior to establishing Dawgen.

He is a member of Chartered Management Institute (CMI), member of the Institute of Internal Auditors (IIA) , member of the Association of Certified Fraud Examiners (ACFE), member of Information Systems Audit and Control Association ( ISACA ) member of American Planning Association (APA) , member of the American Finance Association (AFA) and member of Association of Certified E-Discovery Specialists (ACEDS).
As Executive Chairman of Dawgen Global , he is responsible for the strategic guidance and strategy execution of several entities within the Dawgen Global Group.