Globalization has become a double-edged sword for countries to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a race to the bottom. The global minimum tax proposed in Pillar Two aims to end tax competition by setting a floor for corporate tax rates with various corrective measures so that multinational enterprises’ income is taxed once in either source or residence country at a substantive tax rate. This chapter explains that Pillar Two is the first implementation of the single tax principle at the global level, breaks down the principles and policies that comprise Pillar Two, and anticipates what promise and pitfalls passage of the global minimum tax will bring. Pillar Two requires an unprecedented amount of coordination among countries for implementation, but it is reasonable to anticipate its success if it is implemented by all the G20 countries.

Multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence. Recently, a global tax deal (BEPS 2.0) was reached to tackle these issues. Proposed by the OECD/G20 Inclusive Framework and endorsed by nearly 140 countries, BEPS 2.0 sets forth two Pillars: Pillar One addresses digital taxation while Pillar Two addresses a global minimum tax. However, Pillar One’s success is doubtful, as its details have become increasingly complex and degraded by political compromises and carve-outs. Also, countries are unlikely to repeal digital services taxes (DSTs), which is an adamant requirement of the United States in adopting Pillar One. This chapter presents the treaty overrides problem that will occur if the United States implements Pillar One by executive agreement to bypass the treaty ratification and suggests separating the two Pillars to preserve the global minimum tax. Regarding DSTs, it provides empirical studies that demonstrate the harm retaliatory tariffs cause. Finally, it endorses the UN’s digital taxation proposal and proposes a new data excise tax.

This chapter argues that the current revolution in international tax continued in the two pillars of BEPS 2.0 have roots in existing developments from older tax regimes. Therefore, it concludes that the current revolution is less revolutionary than many have argued. Specifically, the chapter discusses how Pillar One derives from efforts to redefine the source of active income considering the digital revolution, which builds on US states’ use of sales factors since the 1930s as a source of corporate income. For Pillar Two, the chapter argues that the single tax principle implemented by Pillar Two can be traced back to the first model treaty from 1927. However, there are new elements worth appreciating, which include the new dynamics in the trilemma (open economy, tax competition, and social safety net) due to the global minimum tax, digital taxation, the emergence of market jurisdictions in revenue competition, the strengthening of multilateral cooperation in international tax matters, the tension between multilateralism and unilateralism, and the emphasis on the equity and inclusiveness.

There is a potentially correct analogy between international tax regulation and platform content regulation because there is an homology between capital and information. On this basis, this chapter foregrounds three resemblances between tax regulation and content moderation. First, non-State actors access, manage and regulate through platforms flows of capital and similarly flows of information exploiting regulatory differentials, so that there is the need for regulatory alignment in both cases. Second, since both capital and information escape the regulatory reach of States, a common standard must be achieved in both cases. Third, such common standard can be achieved only if home States of Global Actors owning platforms assume together the obligation to moderate profit diversion as well as immoderate use of platform content through procedural accountability. The chapter explains the scope of the global tax problem, and then details the process by which policies have been developed and describes the tax implications of platforms. The chapter concludes suggesting lessons that can be learned from tax regulation for platform responsibility rules: the homology between capital and information points to regulatory structures that reduce excessive opportunism and immoderation in the use of computational capital by platforms.