15%: Starting Point or Dead End?

Examining the G7’s proposed minimum global corporate tax rate

Sara J Wells
5 min readNov 1, 2021

Depending on who you ask, corporate tax havens may soon be a thing of the past… or at least, they may be smaller, fewer, and farther between.

On June 5th, G7 finance ministers struck a ‘seismic’ agreement on a long-discussed Two Pillar global tax reform. Nearly a month later, the Organization for Economic Cooperation and Development (OECD) announced on July 1st that 130 countries have endorsed a blueprint to put in place a policy ready for final approval by the end of October 2021 (Lynch, 2021).

Pillar #1: multinationals with at least a 10% profit margin will be required to pay tax in all countries where they operate, not just where they are headquartered. 20% of excess profits will be reallocated and subjected to taxes in their operating countries.

Pillar #2: ministers agreed to the ‘principle’ of at least a 15% global minimum corporate tax on a country-by-country basis.

The agreement will be discussed further at the G20 Financial Ministers & Central Bank Governors meeting in July (G7 UK 2021, 2021).

However, some private and public sector economists question the subsequent publicity championing the agreement’s ‘seismic’ nature. Is the buzzing excitement misplaced?


Prior to 2017, the statutory corporate income tax rate (state plus federal) in the U.S. was 38.9%, compared to the worldwide average range of 20–25%. Since the 2017 passing of the Tax Cuts and Jobs Act (TCJA), the statutory corporate income tax rate (state plus federal) in the U.S. has dropped 33.67% in value. Now sitting at 25.8%, it is more in line with the worldwide average.

The TCJA denotes an attempt to encourage U.S. corporations to bring their profits back onshore rather than passing them through to foreign tax havens. Policymakers are focused on the repatriation of corporate profits due to the drastic decline of corporate income tax revenue as a percent of total tax revenue from over 20% to barely 5% during the last 60 years (Tax Foundation, 2021).


What is a tax haven? More delicately referred to as an offshore financial center, a tax haven is a jurisdiction with minimal-to-no tax liabilities for foreign individuals and businesses. These domiciles do not require that an individual live or a business substantially operate within their borders to qualify.

In 1998, the OECD defined the standard criteria for tax haven qualification. A sample of key criteria:

· No, or minimal, tax on income
· Lack of effective exchange of information
· Lack of transparency
· No substantial operating activities

While Bermuda comes in first as the world’s top tax haven, the Netherlands comes in a close second as the favorite of the Fortune 500 multinationals. Ireland is interesting in that officials assert it is not a tax haven despite it being used as such by well-known multinationals (Corporate Finance Institute, 2021).


Individuals, corporations, and tax-haven countries benefit substantially.

Individuals and businesses experience drastic tax savings, incurring rates from zero to low single digits compared to higher taxes of their country of citizenship or domicile.

Remember the revelations of the 2016 Panama Papers? They confirmed the primary objective of establishing offshore companies was to conceal the identities of the true company owners. Various well-known international banks were revealed to have helped their clients establish a business in offshore jurisdictions as a part of wealth management services.

Household names such as Apple, Nike, and Goldman Sachs lead the pack as notable beneficiaries. Apple alone has USD $214.9 billion in profits booked offshore in Ireland, equating to $65.4 billion in taxes lost for the U.S. government. A select composite of some of the 50 largest U.S. multinationals has passed through approximately $1.6 trillion, approximately 38% of their total profits, to offshore tax havens.

Now consider the tax haven governments currently earning revenue. Minimal taxes, in aggregate, add up to material earnings over time. However, a tax haven country’s greatest financial benefit lies in the recurring fees associated with administrative operations such as annual registrations and licensing (Corporate Finance Institute, 2021).

While the net impact is widely debated, profit pass-throughs and repatriation are ultimately a zero-sum game. Where one party benefits, another inevitably loses.


The verdict is still out. It will probably be up for debate for the foreseeable future.

This representation of global solidarity to set a corporate income tax floor is monumental as a history textbook-worthy event. The following months of international policy drafting will be interesting to watch unfold as the October 2021 deadline approaches for a proposal.

Setting a 15% floor is a starting point towards redirecting offshore, untaxed profits back to countries of operation and domicile. The materiality of repatriation ($ billions/year) provides a significant boost to the budgets and funding of the benefiting nations. However, the removal of this competitive advantage from countries reliant on their tax haven status depletes local budgets, economies, and jobs. Additionally, the intricacies of defining 1) taxable income and 2) redistribution of income across operating and domicile nations are riddled with competing interests and schools of thought (Meyer & Walt, 2021).

Pictured: Mount Everest, Source

Structuring tax policy is often a heated and tenacious endeavor. Structuring international policy is convoluted with hidden ramifications lurking at every turn. Structuring international tax policy is… let’s put it this way. If it does manage to happen, imagine it feeling like such: your morning begins wading into winds well over 100 mph, your afternoon peaks in a chaotic traffic jam at 29,032′ elevation, and your night ends under feeling physically defeated but mentally accomplished under a shower of shooting stars while descending Mount Everest.

While this metaphor may be a bit exaggerated, it drives home the point: standardizing a global international tax policy is a possible but tumultuous and obstacle-ladened feat.


Corporate Finance Institute. (2021, 27 06). CFI. Retrieved from Tax Haven: https://corporatefinanceinstitute.com/resources/knowledge/other/what-is-tax-haven/

G7 UK 2021. (2021, June 05). UK Government. Retrieved from G7 Finance Ministers Agree Historic Global Tax Agreement: https://www.g7uk.org/g7-finance-ministers-agree-historic-global-tax-agreement/

Lynch, D. J. (2021, July 1). 130 countries sign on to global minimum tax plan, creating momentum for Biden push. Retrieved from The Washington Post: https://www.washingtonpost.com/us-policy/2021/07/01/global-corporate-tax-oecd/

Meyer, D., & Walt, V. (2021, June 7). Fortune. Retrieved from ‘Far too low’: Tax justice campaigners push back against the G7’s 15% minimum tax-rate pact: https://fortune.com/2021/06/07/global-minimum-corporate-tax-rate-g7-15-percent-pact/

Tax Foundation. (2021, June 28). Tax Basics. Retrieved from Corporate Income Tax: https://taxfoundation.org/tax-basics/corporate-income-tax-cit/



Sara J Wells

blockchain-enamored | wall street escapee | digging into puzzles that interest me