Inclusive Framework Agreement on the Global Minimum Tax

This policy brief by the International Institute for Sustainable Development (IISD) examines the impact of the OECD's Pillar Two global minimum tax on developing countries, specifically focusing on the challenge posed by fiscal stabilization clauses in investment contracts and domestic laws.

• Pillar Two utilizes four 'GloBE rules' to discourage tax competition: the income inclusion rule, the switch-over rule, the undertaxed payments rule, and the subject to tax rule. These rules allow jurisdictions to collect tax revenue that would otherwise be lost if a company's effective tax rate is below 15% due to tax incentives.
• Fiscal stabilization clauses—provisions that limit a government's ability to change tax laws or require compensation for such changes—primarily affect developing and emerging economies. These clauses may prevent governments from raising tax rates to the 15% minimum without risking international arbitration or lawsuits via investor-state dispute settlement provisions.
• The IISD recommends that the OECD's model legislation and commentaries explicitly state that the global minimum tax applies regardless of stabilized incentives. Furthermore, it suggests that Inclusive Framework members should agree that good-faith measures to implement GloBE rules are not breaches of international law, arbitrary, or expropriatory.

APA

International Institute for Sustainable Development (n.d.). Inclusive Framework Agreement on the Global Minimum Tax. https://www.iisd.org/system/files/2021-11/inclusive-framework-agreement-global-minimum-tax.pdf

Chicago

International Institute for Sustainable Development. Inclusive Framework Agreement on the Global Minimum Tax. n.d. https://www.iisd.org/system/files/2021-11/inclusive-framework-agreement-global-minimum-tax.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Inclusive Framework Agreement on the Global Minimum Tax |url=https://www.iisd.org/system/files/2021-11/inclusive-framework-agreement-global-minimum-tax.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndinclusive, author = {{International Institute for Sustainable Development}}, title = {{Inclusive Framework Agreement on the Global Minimum Tax}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/2021-11/inclusive-framework-agreement-global-minimum-tax.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }