Abstract
This study investigates the impact of the Global Anti-Base Erosion Rules (GloBE), also known as the global minimum tax, on the investment costs and location choices of multinational corporations (MNCs). Using a worldwide group-year sample of MNCs, the study first finds that MNCs have made ex ante adjustments in their business strategies that have led to increases in their investment costs. Next, by analyzing the changes in the actual organizational structures of MNCs, this study identifies that MNCs have made preemptive real relocation decisions by shifting their affiliates from low-tax-rate countries to high-tax-rate countries, even before the formal implementation of the regime. It further finds that proactive relocation is mostly conducted by MNCs with high tax-planning effectiveness, resulting in lower investment costs. This study contributes to the literature by showing that anticipation of international tax policy has led to organizational restructuring of MNCs and the reallocation of financial resources worldwide, and by underscoring the importance of accounting for various capital and economic dimensions when evaluating the economic outcomes of tax policies. It also cautions that the effects of tax policies may impose unintended burdens on firms with relatively limited capacity.