The Future of Tax Incentives in the European Union in Light of the Regional Implementation of the OECD 'Pillar Two' Proposal and the Minimum Level of Taxation

Abstract

This master's thesis provides a thorough analysis of tax incentives, examining their classification, the policies behind them, focusing on their widespread use by jurisdictions seeking to attract investment. Considering the abusive strategies, which have become widespread in the light of the active use of tax incentives, the urgent need arose to find ways to overcome such a negative tendency. That is why, international community have proposed a “two pillars” solution, that aimed at tackling BEPS and tax avoidance among jurisdictions. This thesis pay particular attention to the genesis of the OECD's Pillar Two framework, peculiarities of GloBE Rules and their impact on existing tax incentives. This research is aim to find ways to safeguard tax incentives and identify existing “safe” tax incentives that still can be implemented by countries to promote genuine economic development in accordance with new tax policy. Despite the numerous limitation and requirements placed on shoulders of countries with the adoption of GloBE Rules, it still remains possible to preserve tax incentives that align with those requirements. For this purpose, every jurisdiction, that desire to stay afloat and still benefit from tax incentives, have to adopt more sophisticated and well-designed incentives that would generate genuine economic activity and align with global tax policy. This master’s thesis serves as a valuable contribution to the continuing discussion about international tax policy by offering policymakers ideas on how to adapt to new developments in post-Pillar Two era.