Global minimum tax policies could reduce the ability of developing countries to attract foreign investment through tax incentives and lower tax rates. This could hamper their competitiveness in the global market and hinder economic growth.

Whilst Global Minimum Tax is introduced to combat profit shifting, the possibilities remain for companies to shift profits to certain jurisdictions, especially if the tax rate differential is significant. There is a concern that global minimum tax policies could lead to profit shifting by MNCs from developing countries to jurisdictions with lower tax rates. This could result in a significant erosion of the tax base in developing countries, reducing their ability to fund public services and infrastructure development.

Developing countries may face challenges in implementing and enforcing global minimum tax rules due to limited resources and expertise. This could lead to increased compliance costs and difficulties in ensuring tax compliance by MNCs operating within their borders.

Despite the challenges, global minimum tax policies could help developing countries increase their tax revenue. By ensuring that MNCs pay a minimum level of tax, these policies could provide a stable source of funding for public services and infrastructure development.

Global minimum tax policies could help level the playing field for developing countries. By reducing the incentive for profit shifting and tax avoidance by MNCs, these policies could create a more equitable tax system, ensuring that all companies pay their fair share of taxes.

Global minimum tax policies could also enhance the investment climate in developing countries. In effect, this will increase the importance of considering other non-tax factors in investment decision-making. By reducing the perception of these countries as tax havens and ensuring a more stable and transparent tax regime, these policies could attract more foreign investment, driving economic growth and development.