Minimum Global Tax: Winners and Losers in the Race for Mergers and Acquisitions

Arbeitspapier

This study aims to quantify the impact of the global minimum corporate tax rate – a pillar of the OECD's reform of international taxation – on cross-border mergers and acquisitions (M&A) involving large multinational enterprises (MNEs). First, the influence of differences in capital taxation on bilateral cross-border M&A is assessed using a structural gravity model. The resulting estimated coefficients are then applied to evaluate the impact of a 15% global minimum tax rate on cross-border investments by firms whose revenue exceeds €750 million, whenever the target country's corporate tax rate is lower. The study exploits a large, disaggregated dataset of 13,562 investor-firm M&A data points from 2001 to 2020 relating to 516 industries, defined at the 4-digit level of the NACE Rev. 2 classification, in 109 'source' countries, and 559 industries (defined at the same of detail) in 161 'target' countries. The empirical results suggest that M&A flows are higher when the source and target countries have similar tax rates, while the overall effect of the global minimum corporate tax on M&A flows would be negative (as expected), but small.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16144

Classification and Topics

• Classification: Wirtschaft ; International Fiscal Issues; International Public Goods ; Multinational Firms; International Business
• Subject: global tax rate ; bilateral foreign direct investment ; profit shifting ; Structural Gravity model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Amendolagine, Vito ; Bruno, Randolph Luca ; Cipollina, Maria ; De Pascale, Gianluigi
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/272771
• Last update: 10.03.2025, 11:41 AM CET