2024 will herald the end of a race to the bottom in corporate tax rates

THE coming new year will mark a new dawn for the taxation of large multinationals. Rules setting a minimum level of taxation for these businesses will start applying in jurisdictions across the world. 

This major development will finally put a floor under the harmful competition that, over the past four decades, has created a relentless downward spiral in statutory corporate tax rates worldwide.

Since 1980, these have decreased from an average of 40 per cent to 23 per cent; in Europe the fall has been even greater, from 45 per cent to just under 20 per cent. In many cases, additional sweeteners, preferential rates and unacceptable loopholes allowing profits to be shifted to zero or low-tax jurisdictions have resulted in effective tax rates well below those headline figures.