Pillar Two and Developing Countries: What to Expect?

Sammanfattning: Aggressive tax planning practices through schemes involving low-tax jurisdictions have been the target of the Organization for Economic Co-operation and Development (OECD) to end harmful tax competition and the so-called “race to the bottom”. Pillar Two Model Rules is the latest OECD way to achieve this objective. This thesis calls into question the design of these rules when applied to the realities of developing countries and argues that the idea that the GloBE Rules are a golden opportunity for source countries to raise significant additional tax revenues seems to fail when confronted with the circumstances of developing countries, mainly source countries. The design of the Pillar Two provisions makes countries’ tax policies intertwined. Therefore, developing countries are not exempt from Pillar Two consequences whether they choose or not to domestically implement its rules. The challenge is real for these countries, which must assess the potential impact on their tax competition and future tax revenues and determine whether the GloBE rules can help them achieve their sustainable development goals. This thesis attempts to give a perspective on what lies ahead for these countries in the Pillar Two new era.