The Impact of Global Tax Reforms on Multinational Corporations: A Study of Base Erosion and Profit Shifting (BEPS)

Abstract

Global tax reforms, particularly the Base Erosion and Profit Shifting (BEPS) measures, have been introduced to prevent multinational corporations (MNCs) from shifting profits to low-tax jurisdictions and to enhance tax transparency. This study examines the impact of global tax reforms on MNCs' tax planning strategies and financial performance, assesses the effectiveness of BEPS measures in curbing profit shifting, and evaluates the compliance challenges faced by corporations in adapting to new tax regulations. A quantitative research design was employed, with data collected from 60 business CEOs across Pakistan using a self-administered Likert-scale questionnaire. Regression analysis, multiple regression, and ANOVA were used to analyze the data. The findings reveal that global tax reforms have an insignificant impact on tax planning strategies and financial performance, as indicated by a low R-Square value and a non-significant regression model. However, a significant correlation was found between compliance challenges and corporate strategic adaptation, suggesting that as tax regulations become more complex, businesses adjust their financial structures accordingly. These results align with previous studies, indicating that while BEPS measures aim to improve tax fairness, their direct financial impact on corporations remains minimal. The study recommends stronger enforcement of global tax policies, increased international cooperation, improved corporate transparency, and tailored tax policies for developing economies. Future research should explore the long-term effects of these reforms and the role of digital tax compliance tools in shaping corporate tax behavior.