Multinationals' Tax Strategies: A Global Concern

The tax strategies employed by multinational corporations (MNCs) have become a significant concern for governments worldwide, as these companies often exploit legal loopholes to minimize their tax liabilities. A recent study by TaxWatch highlights the impact of these strategies on the UK's tax revenue, estimating that the country misses out on an estimated £2 billion ($2.4 billion) in revenue due to the tax minimization strategies of seven large tech businesses (TaxWatch, 2025).



To address this issue, the UK government can take several measures:

1. Implement the OECD's global tax floor: The Organization for Economic Cooperation and Development (OECD) has set out technical guidance to help governments implement a global tax floor of 15 percent. This move aims to discourage businesses from offshoring profits to low-tax havens, thereby avoiding levies. The OECD estimates that this project could raise $150 billion in additional annual tax globally (OECD, 2025).
2. Remedy the lack of publicly available data: Claire Ralph, director of TaxWatch, has called on the government to remedy the lack of publicly available data about UK corporation tax paid on the profits multinational giants make in the UK. This transparency would help the government better understand the extent of tax avoidance and enable it to take targeted action (TaxWatch, 2025).
3. Strengthen domestic tax laws: The UK government can review and strengthen its domestic tax laws to make it more difficult for MNCs to shift profits out of the country. This could involve closing loopholes and ensuring that tax rules are applied consistently across all businesses operating in the UK.
4. International cooperation: The UK can work with other countries to share information and coordinate efforts to combat tax avoidance by MNCs. This could involve participating in international organizations like the OECD or the G20 to develop and implement global standards for tax transparency and cooperation.

The OECD's global tax floor of 15 percent is designed to discourage multinational corporations from offshoring profits to low-tax havens, thereby avoiding levies. This move could have several potential long-term effects on multinational corporations and their tax strategies:

1. Increased tax revenues for governments: By implementing a global minimum tax rate, governments could potentially raise additional tax revenues. The OECD estimates that the project could raise $150 billion in additional annual tax globally. For instance, the UK alone could potentially raise an additional £2.8 billion ($3.41 billion) in tax revenues from the big seven tech companies if they were to pay a 19% corporate tax rate on their UK profits (TaxWatch, 2025).
2. Shift in tax strategies: Multinational corporations may need to re-evaluate their tax strategies and potentially shift their operations or profits to countries with higher tax rates. This could lead to a more level playing field for businesses, as companies would no longer have the advantage of paying lower taxes in certain jurisdictions.
3. Potential impact on investment decisions: The global tax floor could influence where multinational corporations choose to invest and operate. Countries with higher tax rates may need to offer other incentives, such as improved infrastructure or skilled labor, to attract investment. Conversely, countries with lower tax rates may need to reevaluate their offerings to remain competitive.
4. Potential for double taxation: While the global tax floor aims to prevent profit shifting, there is a risk that it could lead to double taxation. If countries apply the minimum tax rate to the same profits, it could result in multinational corporations being taxed twice on the same income. This could potentially discourage investment and economic activity.
5. Impact on competition: The global tax floor could affect the competitive landscape, as companies with lower tax rates may no longer have an advantage. This could lead to a more level playing field, but it could also result in increased competition for resources and markets.

In conclusion, the tax strategies employed by multinational corporations have a significant impact on the UK's tax revenue and the global tax landscape. To address this issue, the UK government can take several measures, including implementing the OECD's global tax floor, remedying the lack of publicly available data, strengthening domestic tax laws, and international cooperation. The OECD's global tax floor of 15 percent could have significant long-term effects on multinational corporations and their tax strategies, potentially leading to increased tax revenues, shifts in tax strategies, impacts on investment decisions, potential double taxation, and changes in the competitive landscape.