Pierre Bachas (ESSEC Business School)

Effective Tax Rates, Firm Size and the Global Minimum Tax

Pierre Bachas
ESSEC-Business School

Coautrices et coauteurs : Anne Brockmeyer, Roel Dom et Camille Semelet.

Abstract

How does the tax burden vary across firms of different sizes? And what is the scope of a minimum tax? 
This paper details the relationship between firm size and effective tax rates (ETRs) using full-population administrative tax data from 15 countries at different income levels.
In all countries, small firms face lower ETRs than mid-sized firms due to reduced statutory tax rates and a higher propensity to register losses.
In most countries, ETRs fall for the very largest firms due to the take-up of tax incentives.
As a result, a third of the top 1% largest firms face ETRs below 15%.
A minimum tax with a broad base could raise corporate tax revenue by 27% in the median country, but the OECD's global minimum tax proposal would only produce a small share of those gains.