The organization for economic cooperation and development (OECD) recently announced in Paris that 136 countries and jurisdictions have agreed to reform the international tax system and will levy a corporate tax of at least 15% on large multinational enterprises from 2023 to meet the tax challenges brought by economic digitization.

Some analysts believe that the reform of the international tax system helps to avoid tax evasion and avoidance by large multinational Internet enterprises, but it may also affect the economic strategies of some developing countries and smaller developed countries to attract foreign investment, lead to the reduction of foreign investment, and then affect their economic development.

The plan launched by OECD this time is a two pillar inclusive framework for redistributing the right to tax the profits of multinational enterprises and establishing a global effective minimum tax rate. The organization said that pillar one of the programme would ensure a more equitable distribution of the profits and tax rights of the largest and most profitable multinational enterprises among countries. The new rules require multinationals to pay taxes in the country where they operate, not just in their headquarters. The second pillar is to set the global minimum enterprise tax rate at 15%. From 2023, companies with an annual income of more than 750 million euros (about US $870 million) will apply this tax rate.

The OECD said that after the implementation of the program, more than 125 billion US dollars of profits from about 100 large multinational enterprises around the world will be redistributed to countries.
Analysts pointed out that after the implementation of the global minimum enterprise tax rate rule, the motivation of multinational enterprises to transfer their profits to low tax areas or "tax havens" will be significantly reduced.

Michael de fro, a professor of taxation at Oxford University in the UK, once estimated that 78 of the Fortune Global 500 companies would be affected by the pillar I rule, including 37 in the United States and 37 in Europe.
Remy burro, a researcher at the French Institute of international relations and strategy, told Xinhua that starting to tax profits after a country generates turnover and a minimum enterprise tax of 15% will encourage large multinational enterprises to redirect their investment.

In recent years, multinational Internet companies have been accused of taking advantage of loopholes in the current international tax system to avoid taxes while making high profits all over the world.
Google, apple and other technology companies invented a tax avoidance strategy commonly known as "double Irish Dutch sandwich" in the industry in the late 1980s, that is, part of their operating income in Europe is transferred to branches in low tax countries such as Ireland or the Netherlands before paying taxes. For a long time, France and other European countries have been dissatisfied with the Internet giants' use of EU tax loopholes to avoid taxes.

Buluo believes that the new tax system will make it impossible for countries with relatively small economies such as Ireland to continue to attract multinational enterprises at lower tax rates.
Irish corporate tax rate is 12.5%, which is the location of the European headquarters of some Internet giants. Pascal Donohue, Minister of finance, public expenditure and reform of Ireland, previously said that the implementation of international tax reform could cause Ireland to lose 20% of the tax revenue of multinational enterprises.

In addition, some countries and international institutions are also dissatisfied with the 15% minimum enterprise tax rate stipulated in the new scheme. Argentine economy minister Martin Guzman said recently that developing countries are forced to choose between "bad and worse (schemes)".
Suzanne Ruiz, head of tax policy at Oxfam, an international relief organization, said: "the legitimate concerns of developing countries have been ignored. The proposal of a 15% tax rate will benefit rich countries and exacerbate inequality."

Gary hefbauer, senior researcher of Peterson Institute of international economics, previously said that the establishment of the global minimum enterprise tax rate deprives some countries of the policy space to use low tax rates to attract multinational enterprise investment, especially for those economies that have no other means to attract foreign investment. International financial institutions such as multilateral development banks should consider helping these economies.