By Linda Athanasiadou, expert in audit, anti-money laundering (AML), and fraud prevention

The global tax landscape is undergoing a major transformation with the introduction of the Global Minimum Tax (GMT). Designed to curb corporate tax avoidance and level the playing field, this initiative—led by the OECD (Organisation for Economic Co-operation and Development) and G20 nations—aims to ensure that multinational companies (MNCs) pay a minimum tax rate, regardless of where they operate.

For international businesses, the implications of the Global Minimum Tax are significant, affecting tax planning, corporate structures, and profit allocation strategies. Understanding how this policy works and what it means for businesses operating across borders is crucial for staying compliant and adapting to new tax obligations.

What Is the Global Minimum Tax?

The Global Minimum Tax (GMT) establishes a minimum corporate tax rate of 15% on large multinational enterprises (MNEs) with annual revenues exceeding €750 million ($800 million). The goal is to prevent MNEs from shifting profits to low-tax jurisdictions, ensuring they contribute a fair share of taxes in every country where they generate revenue.

This initiative is part of the OECD’s Two-Pillar Solution, aimed at reforming international taxation:

Pillar One: Reallocates taxation rights, requiring MNEs to pay taxes in countries where they have significant economic activity, even if they don’t have a physical presence.
Pillar Two: Introduces the Global Minimum Tax, ensuring large corporations pay at least 15% in corporate taxes globally.

The GMT is expected to generate billions in additional tax revenue worldwide while discouraging aggressive tax planning strategies used to avoid corporate taxes.

How Will the Global Minimum Tax Affect International Businesses?

1. Higher Tax Liabilities for Companies Operating in Low-Tax Jurisdictions Businesses that have relied on tax havens or low-tax countries to minimize their tax burden will face increased tax liabilities. If a company’s effective tax rate in a given jurisdiction is below 15%, additional tax will be imposed to bring the rate up to the global minimum threshold.

For example, if a multinational corporation is paying 5% tax in an offshore jurisdiction, it will now have to pay an additional 10% to meet the GMT requirements. This change forces businesses to reassess their tax structures and profit allocation strategies.

2. Reduced Effectiveness of Tax Havens Traditional tax havens such as the Cayman Islands, Bermuda, and Ireland have attracted MNEs by offering low or zero corporate taxes. With the GMT in place, the benefits of shifting profits to these jurisdictions diminish, as companies will have to pay top-up taxes elsewhere.

Countries that have built their economies on attracting businesses through favorable tax regimes may need to adjust their tax policies to remain competitive. Some may introduce incentives such as subsidies, grants, or investment credits to compensate for the loss of tax advantages.

3. Compliance and Administrative Challenges The introduction of the GMT requires businesses to overhaul their tax reporting and compliance systems. Companies will need to:

Conduct global tax calculations to determine their effective tax rate across multiple jurisdictions.
Implement more transparent financial reporting to comply with new regulatory requirements.
Coordinate with tax authorities in multiple countries to ensure compliance with Pillar Two rules.

For large corporations with complex international operations, ensuring compliance will involve significant administrative burdens and costs. Businesses will likely need to invest in tax technology solutions and work closely with tax advisors to navigate these changes.

4. Increased Tax Costs for Digital and Tech Companies The GMT disproportionately affects digital companies and tech giants like Google, Apple, Amazon, and Facebook, which have historically used intellectual property (IP) and licensing arrangements to shift profits to low-tax jurisdictions. These companies will now be required to pay more taxes in the countries where they generate revenue, limiting their ability to benefit from tax optimization strategies.

5. Competitive Impacts for Mid-Sized Multinationals While the GMT primarily targets large corporations (over €750 million in revenue), its indirect effects may extend to mid-sized multinationals. Many governments could introduce domestic tax reforms to align with the new rules, leading to increased tax rates or stricter compliance requirements for businesses operating across borders.

Which Countries Are Implementing the Global Minimum Tax?

As of 2025, over 140 countries have agreed to implement the GMT, including the United States, European Union (EU) nations, the UK, Canada, Japan, China, and India. However, some countries are still debating full adoption, and tax enforcement will vary.

Several EU countries, such as Ireland and Hungary, initially resisted the agreement but have since committed to its implementation. Meanwhile, the United States has expressed concerns about how the GMT will affect its global competitiveness but remains a key supporter of the initiative.

How Can Businesses Adapt to the Global Minimum Tax?

To stay compliant and mitigate potential financial impacts, multinational businesses should take the following steps:

1. Reevaluate Tax Structures Companies operating in low-tax jurisdictions must reassess their international tax strategies. This may include restructuring legal entities, revisiting transfer pricing policies, and relocating certain operations to more tax-efficient locations that still offer business incentives.

2. Enhance Tax Reporting and Compliance The GMT will require greater financial transparency and more detailed tax reporting. Businesses should:

Implement global tax tracking software to ensure compliance across multiple jurisdictions.
Strengthen internal audit and risk management processes to align with new regulations.
Regularly consult with tax advisors and legal experts to stay ahead of policy changes.

3. Optimize Use of Tax Credits and Incentives Some governments may introduce alternative tax benefits to attract investment, such as R&D tax credits, infrastructure subsidies, or workforce development incentives. Businesses should explore these opportunities to offset potential tax increases.

4. Monitor Country-Specific Implementation Since not all countries will enforce the GMT uniformly, businesses must stay informed about regional tax policy changes and tailor their strategies accordingly. Monitoring government announcements and working with local tax experts will be essential for minimizing compliance risks.

5. Prepare for Future Tax Reforms The GMT is only one step in global tax reform efforts. Future changes could include expanding the tax base, increasing corporate tax rates, or strengthening anti-avoidance laws. Businesses should adopt a long-term tax strategy that remains flexible and adaptable to evolving regulations.

Final Thoughts

The Global Minimum Tax represents a fundamental shift in international tax policy, aiming to reduce tax avoidance and promote fair competition. While large multinational corporations will feel the most immediate impact, businesses of all sizes should stay informed and proactively adjust their tax strategies to remain compliant and financially efficient.

For more insights into corporate tax strategies, I recommend reading my article, “5 Common Tax Mistakes That Could Get Your Business Audited,” which explores key tax pitfalls and how to avoid them.

The Global Minimum Tax: What It Means for International Businesses