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Domestic Minimum Tax Can Help Small Island States, Group Says

Sept. 23, 2022, 6:27 PM

Small island developing countries should consider enacting domestic minimum taxes as part of the global deal’s 15% minimum tax, the South Centre said Friday.

Under Pillar Two of the 2021 global tax agreement, countries can apply extra tax to companies not meeting the minimum rate in other jurisdictions. To prevent other countries from applying those rules on businesses operating within their borders, governments can choose to apply a qualified domestic minimum top-up tax.

The report also recommended that countries participating in the deal that don’t have a corporate income tax—like Bahamas, Bahrain, and Belize—or countries with a very low ...