International investment agreements and the global minimum tax: of treaty troubles and investment incentives.

This article examines the interaction between the global minimum tax (GMT), specifically the Global Anti-Base Erosion (GloBE) rules under the OECD/G20 Inclusive Framework, and International Investment Agreements (IIAs). It explains that while the GMT aims to impose a minimum effective tax rate of 15% on multinational enterprises (MNEs), many income-tax-based investment incentives may be undermined, potentially triggering claims under IIA protection standards such as fair and equitable treatment and non-discrimination. However, the article argues that MNEs are unlikely to initiate widespread investor-State dispute settlement (ISDS) cases challenging the GMT’s implementation due to limited economic benefit and legal uncertainties; instead, they may leverage IIAs to negotiate replacement of corporate income tax incentives with alternative economic benefits not directly captured by the GMT. The paper highlights the need for better coordination between tax and investment policymakers and suggests that the GMT’s design may shift tax competition to other fiscal instruments beyond corporate income tax.