Taxation of Multinational Entities in the International Tax Law - With Special Focus on Fairness in the GloBE-proposals Pillar II

Damon Tahami

Student thesis: Master thesis


This thesis examines the GloBE-proposal, which is a part of the of BEPS-project. The purpose behind the BEPS-project is to address the remaining difficulties and problems that exist with base erosion and profit shifting in a global and digitalized world. We see increasing numbers of international operating companies, this has both advantages and disadvantages regarding a constant developing world. A clear disadvantage is that some companies takes leverage of the digitalized world’s opportunities, and thereby choose to place whole or part of their business in “low-tax jurisdiction”. This thesis explores, and has its focus on the BEPS-projects Pillar II. The focus on Pillar II is limited to the income inclusion rule, “top-up skat” and “top down approach”. The thesis is based on an assumption, that the proposed directive from EU, will be implemented in its current form, and thereby is existing law. This thesis is divided into four main chapters. Chapter 1 is the introduction of the thesis. Chapter 2 derives the existing law, with focus on Pillar II’s IIR, “top-up tax” and “top down approach”. Chapter 3 assesses whether the existing law brings the international tax system in a fairer direction, based on the criteria “equal treatment’ and “simplicity”. Chapter 4 assesses and discusses whether the criteria performs better at unitary taxation, as an alternative way to structure the existing tax law, with a special focus on taxing the MNEs. This thesis concludes, that “equal treatment” and “simplicity” does not perform well under the existing law. There are a number of concerns about the structure of how existing law is build. However, the thesis also concludes that the criteria performs significantly better at unitary taxation, as an alternative way to build the international tax system. Overall, the unitary taxation will result in a more equal and simple international tax system, based on the chosen criteria. Finally it can be concluded, that the criteria performs worse in existing law compared with unitary taxation. Therefor, existing law will not bring the international tax system in a fairer direction. However, unitary taxation is very effective and useful alternative to the international tax system. The criteria also performs better at unitary taxation, which also means that this system will lead to a fairer tax system than the existing law.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2022
Number of pages90
SupervisorsPeter Koerver Schmidt