Shaking up multinational taxation

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

Why may judging the success of the global minimum tax project become increasingly difficult?

Because tax rates regionally are declining

Because MNEs will have put other mechanisms in place by the time GMT becomes effective

Because the project is evolving alongside changing global and political conditions

Because an increasing number of countries are participating over time

What fundamentally distinguishes the emerging international tax regime from previous arrangements?

Its focus on developed economies only

Its shift away from refundable investment credits to tax breaks

Its shift from bilateral treaties to a coordinated multilateral framework

Its reliance on unilateral enforcement

What long-term effect beyond taxation could arise from the BEPS project?

Automatic harmonisation of US GAAP ASC 70 and IAS 12

Application of coordinated mechanisms to other crossborder issues

Centralisation of tax collection

Elimination of tax incentives worldwide

What historical behaviour by countries contributed to the need for a global minimum tax?

Uniform adoption of digital services taxes

Greater enforcement of anti-avoidance rules

Increases in corporate tax rates globally

Competition to attract mobile capital through lower taxes and other incentives

Which of the following statements best captures the relationship between Pillar One and Pillar Two?

Pillar One focuses on minimum taxation, while Pillar Two reallocates profits

Pillar One reallocates taxing rights, while Pillar Two ensures a minimum effective tax rate

Pillar One ensures a minimum effective tax rate, while Pillar Two reallocates taxing rights

Pillar Two replaces the need for Pillar One

Why might an MNE still face a top-up tax under GloBE despite a local statutory tax rate of 15 percent or higher?

Because GloBE applies a higher minimum rate in some countries

Because GloBE ignores domestic tax rates

Because certain tax incentives can reduce the effective tax rate

Because only withholding taxes are considered

What practice does the OECD project aim to stop?

Corporate tax evasion by individuals

Currency manipulation

Double taxation

Base erosion and profit shifting

What was the significance of the OECD 'side-by-side package' introduced in January 2026?

It increased the global minimum tax rate

It abandoned Pillar Two entirely

It sought to address EU concerns while preserving the integrity of the GMT

It sought to address US concerns while preserving the integrity of the GMT

What could be the most enduring achievement of the project?

The elimination of tax competition

A precedent for coordinated international tax action

The establishment of a single global tax authority

Higher tax revenues for developing countries

How did the US respond to the OECD rules in January 2025?

It delayed implementation by five years

It proposed a higher global minimum tax rate

It declared the rules would have no force or effect for the US

It fully adopted Pillar Two

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