Proposal: Establishing a Global Minimum Corporate Tax Rate

{
"title": "Legislative Proposal for a Global Minimum Corporate Tax Rate: Securing Public Funds for Social Prosperity",
"description": "# Legislative Proposal for a Global Minimum Corporate Tax Rate: Securing Public Funds for Social Prosperity\n\n## Preamble\n\nWHEREAS, the current global tax landscape is characterized by intense tax competition among nations, leading to a detrimental 'race to the bottom' in corporate tax rates;\n\nWHEREAS, this phenomenon allows multinational corporations (MNCs) to exploit loopholes and shift profits to low-tax jurisdictions, thereby avoiding their fair share of contributions to the societies in which they operate and profit;\n\nWHEREAS, the erosion of national tax bases deprives governments of critical revenue needed to fund essential public services such as healthcare, education, social security, infrastructure, and climate action, disproportionately burdening working people and small businesses;\n\nWHEREAS, a robust social democratic vision demands a global economic system that prioritizes fairness, equitable distribution of wealth, and the collective well-being of all citizens;\n\nWHEREAS, establishing a global minimum corporate tax rate is a fundamental step towards rebalancing the global economy, fostering fair competition, and strengthening the capacity of states to invest in human development and social protection;\n\nTHEREFORE, BE IT ENACTED BY THE WORLD PARLIAMENT:\n\n## Article 1: Establishment of a Global Minimum Corporate Tax Rate\n\n### Section 1.1: Rate and Scope\n\nA global minimum corporate effective tax rate of 25% (twenty-five percent) shall be established for all Multinational Enterprises (MNEs) with consolidated group revenues exceeding €750 million (seven hundred and fifty million Euros) in at least two of the four preceding fiscal years. This rate is intended to halt the damaging race to the bottom and ensure that large, profitable corporations contribute adequately to the public good.\n\n### Section 1.2: Mechanism of Application\n\nTo ensure the effective implementation of this global minimum tax, an internationally coordinated system shall be adopted, primarily incorporating:\n\n Income Inclusion Rule (IIR): A parent entity in a participating jurisdiction shall be required to pay a 'top-up tax' on the low-taxed profits of its constituent entities located in other jurisdictions, bringing the effective tax rate up to the global minimum of 25%.\n Under-Taxed Payments Rule (UTPR): Where the IIR does not apply, or does not fully apply, the UTPR shall act as a secondary mechanism, allowing jurisdictions to deny deductions or make equivalent adjustments for payments to low-taxed constituent entities within an MNE group.\n\n### Section 1.3: Qualified Domestic Minimum Top-up Tax (QDMTT)\n\nJurisdictions shall be encouraged to implement a Qualified Domestic Minimum Top-up Tax (QDMTT) to collect the top-up tax on low-taxed profits of MNE entities located within their own borders. This allows the source jurisdiction to collect the tax revenue that would otherwise be collected by a parent entity's jurisdiction under the IIR.\n\n## Article 2: Objectives and Principles\n\nThis Legislative Proposal is underpinned by the following core objectives and principles:\n\n 2.1 Fiscal Justice and Stability: To ensure that large corporations pay their fair share of taxes, thereby providing stable and predictable revenue streams for national governments to fund public services and social safety nets, reducing reliance on regressive taxation that disproportionately affects working families.\n 2.2 Fair Competition: To level the playing field for domestic businesses and small and medium-sized enterprises (SMEs) that cannot exploit international tax planning strategies, fostering a more equitable and competitive economic environment.\n 2.3 Strengthening the Welfare State: To empower governments with the financial resources necessary to strengthen the welfare state, expand access to quality public healthcare and education, enhance social security programs, and invest in sustainable development goals.\n 2.4 Reducing Inequality: By increasing corporate tax contributions, this measure will contribute to a more progressive tax system, helping to reduce income and wealth inequality and build a more inclusive society.\n* 2.5 International Cooperation: To foster greater international cooperation and solidarity in addressing global economic challenges, demonstrating that collective action can yield tangible benefits for all nations and their citizens.\n\n## Article 3: Governance, Transparency, and Dispute Resolution\n\n### Section 3.1: Oversight and Guidance\n\nThe World Parliament, in collaboration with the World Tax Authority (WTA) – to be established or designated – shall provide ongoing oversight, develop detailed implementation guidance, and facilitate capacity building for national tax administrations, particularly in developing nations, to ensure consistent application of this global minimum tax.\n\n### Section 3.2: Enhanced Transparency and Reporting\n\nMNEs falling under the scope of this proposal shall be mandated to provide comprehensive public Country-by-Country Reporting (CbCR), detailing their revenues, profits, taxes paid, and economic activities in each jurisdiction where they operate. This enhanced transparency is crucial for public scrutiny and effective enforcement.\n\n### Section 3.3: Dispute Resolution Mechanism\n\nA robust and impartial dispute resolution mechanism shall be established under the auspices of the World Tax Authority to address conflicts and ensure consistent interpretation and application of the global minimum tax rules among participating jurisdictions.\n\n## Article 4: Review and Adjustment\n\n### Section 4.1: Periodic Review\n\nThe World Parliament shall conduct a comprehensive review of the effectiveness, economic impact, and social outcomes of this global minimum corporate tax rate every five (5) years from its entry into force.\n\n### Section 4.2: Adjustment Mechanism\n