IMF: Corporate Tax to Increase 14% with Introduction of Global Minimum Tax

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyunjung] The International Monetary Fund (IMF) has projected that if the global minimum tax, which mandates maintaining a corporate tax rate of at least 15%, is implemented, the corporate tax burden for companies worldwide could increase by about 14%.

On the 12th (local time), Bloomberg News cited the IMF's recent forecast, reporting that the introduction of the minimum tax would increase global corporate tax payments by approximately $150 billion (about 5.7%, roughly 184.575 trillion KRW). The IMF also anticipated an additional corporate tax burden increase of about 8.1% due to reduced tax competition.

The IMF explained that applying a 15% floor globally would reduce companies' incentives to hide income in countries with lower tax rates by using complex business structures. Furthermore, it echoed the Organization for Economic Cooperation and Development (OECD)'s previous projection that this new tax rate would ultimately lead governments worldwide to redistribute taxing rights amounting to about $125 billion annually.

The IMF's forecast assumes that countries currently applying tax rates below the minimum will raise their rates to the minimum level. The news agency reported that this estimate "offers an optimistic outlook that could put an end to the cross-border profit shifting problem that world leaders have been trying to resolve for years." According to the OECD, digital internet companies are estimated to avoid paying approximately $100 billion to $240 billion in taxes annually through tax avoidance methods.

However, this estimate does not consider the possibility that some countries that signed the global tax agreement last year may ultimately not implement it. Even the OECD, which actively participated in the negotiations, does not have enforcement authority over this.

Signs of backlash against actual implementation are also emerging. Earlier this month, Poland blocked compromises made within the European Union (EU) to implement this agreement, and other resolutions have been postponed for discussion next month or later.

This content was produced with the assistance of AI translation services.