How Do U.S. Multinationals Navigate the Global Minimum Tax?

We examine how U.S. multinationals respond to the introduction of the Global Minimum Tax. Using various data sources, we document strategic responses by firms to mitigate the impact of the Global Minimum Tax. First, corporate disclosures indicate increasing recognition of the Global Minimum Tax but emphasize uncertainty. Second, exploiting historical ownership data and the EU's adoption of Pillar Two, we show that U.S. multinationals are significantly more likely than European multinationals to restructure ownership chains to avoid exposure to the Global Minimum Tax. Further, we show that U.S. multinationals with tax haven exposure do not experience any detectable increase in effective tax rates. Finally, we conduct a survey of U.S. tax directors to gather perceptions of the Global Minimum Tax and provide context for our empirical findings. Overall, our findings highlight how strategic organizational adjustments by U.S. multinationals and tax policy design by low-tax countries substantially attenuate the intended effects of the Global Minimum Tax.