This article addresses
the emerging conflicts between Pillar Two taxation rules and international
investment agreements (IIAs) by focusing on developing methodologies for
assessing economic damages in related disputes. The study aims to establish a
comprehensive framework for quantifying economic losses arising from potential
IIA violations due to Pillar Two implementation. It examines the legal basis
for damage claims under IIAs by analysing relevant precedents and provisions.
The research evaluates various methodological approaches for calculating
damages in international investment disputes and assesses their suitability for
Pillar Two-related scenarios. Economic models and quantitative techniques, such
as the discounted cash flow (DCF) analysis and the lost profit method, are
examined for their effectiveness in estimating Pillar Two’s financial impact on
investors. The article incorporates case studies and reviews past damage
assessments in tax-related contexts. It discusses policy implications and
offers guidelines for key stakeholders including policymakers, investors, and
arbitral tribunals as well as focusing on best practices and potential
challenges in damage assessment. This research aims to alleviate a critical
deficiency in the existing literature by providing a nuanced, multidimensional
framework to facilitate a more informed approach to resolving disputes at the
intersection of Pillar Two rules and IIAs.