Explanation –

Statement 1 is correct. GMCT is a proposed international tax reform that would set a minimum tax rate of 15% on multinational corporations. It is designed to address the problem of tax avoidance, where companies shift their profits to low-tax jurisdictions in order to reduce their overall tax burden.

The GMCT will work through a two-pillar approach:

• Pillar One: This pillar would allow countries to tax a share of the profits of multinational corporations that are generated in their markets, even if the company does not have a physical presence in the country.
• Pillar Two: This pillar would introduce a global minimum tax rate of 15% on multinational corporations. If a company pays less than 15% tax in any country where it operates, its home country would be able to impose a top-up tax to bring the effective tax rate up to 15%.

Statements 2 and 3 are incorrect. GMCT is not a tax on the gross revenue of multinational corporations. It is a tax on the profits of multinational corporations. The GMCT is designed to reduce the incentives for companies to shift their profits to low-tax jurisdictions.

The GMCT does not require all multinational corporations to pay the same tax amount, regardless of their size or location. The tax rate will be applied to the net income or profit that enterprises make from their businesses, and the actual tax liability will depend on the size and location of the corporation.

Source: ForumIAS