CYIL vol. 14 (2023)

CYIL 14 (2023) THE ROLE OF INTERNATIONAL ORGANIZATIONS IN ESTABLISHING THE GLOBAL… taxation directive. 59, 60 To provide an example, in the Czech Republic, this directive has been implemented into a draft law on top-up taxes for the purpose of ensuring a minimum level of taxation of large multinational and large domestic groups which is currently in the legislative process in the Czech Parliament. 3.3 Global Minimum Tax and Future of Tax Incentives Firstly, implementation of the Pillar Two may impact sovereignty and fiscal determination by forcing a country to raise its corporate income tax rate or dismantle incentives based on the norms of another country. 61 But there is an increasingly strong case made for eliminating tax incentives as they are inefficient and adversely affect a country’s tax revenues. 62 There is not a zero-sum game between tax sovereignty and international cooperation 63 and strict focus on state sovereignty can lead to biases towards high income countries, which can maintain established power relations. 64 Furthermore, curbing tax competition may somewhat restore the sovereignty of countries with preferences for high business tax rates while indirectly restricting fiscal and economic sovereignty of low tax countries seeking to attract investments. 65 Ultimately, addressing tax competition can shift policy focus back to other factors as countries will try to attract potential investors. This presumes that the regulatory competition will be better than tax competition. 66 The decision certainly remains within the power of individual states and does not breach international law in any way, especially if we perceive the work of an Inclusive Framework as having sufficient legitimacy in creating those instrumental rules, implemented through domestic legislation, and especially if the implementation proves to be sufficient and functional. Tension between national, regional, and global interests has continuously been present in the academic and institutions’ proposals, 67 but we can observe that many low tax countries 59 European Comission (2021). Proposal for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union . ({SWD(2021) 580 final}). Retrieved from https://ec.europa.eu/taxation_ customs/system/files/2021-12/COM_2021_823_1_EN_ACT_part1_v11.pdfpg. 1. 60 The Council Directive (2022/2523) on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU entered into force on 23 December 2022. The Directive requires Member States to transpose the rules into domestic law by 31 December 2023. 61 TANDON, S. (2021). Guest Editorial: The Reform of the International Tax System: State of Affairs. Intertax , 309–310. http://www.kluwerlawonline.com/api/Product/CitationPDFURL?file=Journals\TAXI\ TAXI2021037.pdf p. 934. 62 Ibid. p. 932. 63 CUBILLOS GONZALEZ, J. (2022). BEPS Minimum Standards Implementation Impact upon Tax Sovereignty. IBFD Doctoral Meeting of Researchers in International Taxation (DocMIT) . https://hdl.handle.net/1887/3513549 p. 7. 64 EMBLAD, P. (2021). Power and Sovereignty: How Economic-ideological Forces Constrain Sovereignty to Tax. Nordic Journal on Law and Society , 4 (1), 10. https://doi.org/10.36368/njolas.v4i01.206 pg. 18. 65 ENGLISCH, J. International Effective Minimum Taxation – analysis of GloBE (Pillar Two), SSRN (2021). in TANDON, S. (2021). Guest Editorial: The Reform of the International Tax System: State of Affairs. Intertax , 309–310. http://www.kluwerlawonline.com/api/Product/CitationPDFURL?file=Journals\TAXI\ TAXI2021037.pdf p. 932. 66 Ibid. p. 935. 67 OECD, Tax Challenges Arising from Digitalisation – Interim Report 2018, OECD/G20 Base Erosion and Profit Shifting Project (2018) (accessed on 2.5. 2022). In Dourado, A. P. (2022). Editorial Note: The World Split in Two and the Future of the International Tax System [pre-publication]. Ibid., 482–483. http://www. kluwerlawonline.com/api/Product/CitationPDFURL?file=Journals\TAXI\TAXI2022055.pdf. p. 482.

417