IFF-HSG Working Papers – No. 2023-17

Revenue Effects of the OECD Corporate Tax Reform – An Updated Impact Assessment of Pillar Two

by Felix Reitz, University of St.Gallen

Pillar Two of the OECD corporate tax reform introduces a minimum corporate tax rate of 15 percent. OECD estimates suggest that participating jurisdictions, 137 overall, can count on an additional $220 billion in annual tax revenue. Yet, previous impact assessments predate changes to the reform’s core provisions. This study provides an updated impact assessment of Pillar Two that draws on new data and reflects its final parameters. Tax revenue gains at the jurisdiction level are disclosed for the first time. The evidence suggests that Pillar Two revenue gains fall in a range between $68 and $105 billion but could further increase if the provisions were adjusted. Implementing Pillar Two regulation could reverse 23 percent of the decline in global CIT revenue as a percentage of global GDP since 2005. The distribution of revenue gains is skewed in favor of high-income economies and investment hubs; 82 percent of global revenue gains accrue to 15 jurisdictions if no jurisdiction implements a qualified domestic-minimum top-up tax.