To assist in the
introduction and operation of the global minimum tax, the OECD’s supplementary
material includes a rule which would likely result in a multinational entity
paying tax in another jurisdiction on income earned in a particular source
jurisdiction where the entity launches a legal challenge against the source
jurisdiction’s minimum tax. In effect, this rule (intentionally) discourages
taxpayers from using either domestic or international law to challenge the
imposition of a minimum tax, by making the challenge economically unviable.
Some commentators have
queried whether the jurisdictions that adopt this rule may commit a denial of
justice under customary international law, by impeding or discouraging
taxpayers’ resort to rights of access to domestic courts and international
arbitration tribunals constituted under international investment agreements
(IIAs). This paper concludes, however, that such a rule would likely not amount
to a denial of justice in so far as it discourages claims to either domestic
courts or international tribunals. As such, this paper removes one potential
obstacle for countries – particularly developing countries – in implementing
the OECD’s minimum tax rules, even if other obstacles may remain.