The OECD Pillar Two and Its Implications for MNE Tax Strategies: Challenges and Opportunities for Compliance

Recent developments in international corporate taxation reflect a fundamental shift toward stronger multilateral coordination, most notably through the introduction of a global minimum effective corporate tax under the framework developed by the Organization for Economic Cooperation and Development and the Group of Twenty. This reform aims to address persistent challenges associated with profit shifting, base erosion, and harmful tax competition in an increasingly integrated global economy. While the academic literature has extensively examined the technical design and normative justification of minimum taxation, comparatively less attention has been devoted to its implications for multinational enterprises’ tax strategies, compliance behaviour, and the evolving dynamics of international tax competition.

This paper develops a conceptual analysis of how the global minimum tax restructures the economic incentives and legal constraints faced by large multinational enterprises. Drawing on theories of tax competition and profit shifting and incorporating perspectives from international tax law, the study adopts a qualitative research design combining policy analysis, comparative institutional review, and doctrinal examination. The analysis is guided by research questions addressing how minimum taxation reshapes corporate tax planning, investment decisions, administrative complexity, and the scope of fiscal sovereignty across jurisdictions.

The findings suggest that the global minimum tax reduces incentives for traditional profit shifting strategies and promotes partial convergence in effective tax rates, while simultaneously redirecting competitive pressures toward non-rate instruments, regulatory design, and administrative practices. It further demonstrates the central role that compliance capacity and administrative coordination play in shaping corporate responses, particularly in the initial phase of implementation. Importantly, emerging divergences in national adoption practices, carve-outs, and political economy constraints underscore that minimum corporate taxation operates within asymmetric institutional and sovereign bargaining structures, limiting its capacity to function as a uniform global solution. The paper contributes to the literature by developing an integrated analytical framework that conceptualizes global minimum taxation as a restructuring of international tax competition, linking economic theory, international tax law, and early institutional practice to assess its strategic, administrative, and governance implications.