The Enigma of the United States, Base Erosion, and Global Tax Cooperation

The Organisation for Economic Co-operation and Development (OECD) frequently lauds its Pillar 2 project as a cooperative global effort to ensure that large multinational enterprises pay a minimum tax regardless of where they are headquartered and regardless of the jurisdiction where their operations are located. The United States and at least 137 other nations have all agreed that global tax cooperation is consistent with their fiscal interests and their fiscal priorities. However, one should remember the admonition that “the devil is often in the details.” This Article dives into the details of the Pillar 2 model rules, identifying those areas where the model rules are deficient and where further reforms to the GloBE rules are necessary to ensure achievement of the agreed-upon aspirational goal. The Article also sets forth how the United States and other like-minded nations should respond during this interim period where design deficiencies remain in the Pillar 2 model rules.