Article: Pillar Two and African Countries: What Should Their Response Be? The Case for a Regional One

As the OECD’s efforts to implement Pillar Two become more concrete, it becomes more important to understand the implications of this instrument for African developing countries. This article considers the possible responses available to a grouping of African countries in a bid to ensure that their corporate income tax policies are not undermined. In doing so, this article analyses the feasibility of these countries imposing a domestic minimum tax, adapting their tax incentives to non-tax incentives and whether African countries should support the proposal for a United Nations international tax forum. This article argues that it may be feasible for African countries to introduce a targeted domestic minimum tax that would apply to in-scope multinational enterprises (MNEs). Moreover, it may be possible for African countries to adapt their tax incentives to non-tax subsidies although this would involve some costs. It is heartening to see the proposal for a United Nations international tax forum, and it may be in the best interest of African countries to support such an initiative. Pillar Two has far-reaching implications for developing countries and it is important that African countries consider adopting regional responses to it. This article endeavours to create the space for such discussions. Pillar Two, developing countries, Africa, domestic minimum taxes, non-tax subsidies, United Nations, corporate income tax