INTERNATIONAL TAX COMPETITION: ESSENCE AND FEATURES OF IMPACT ON THE STABILITY OF THE WORLD ECONOMY

Abstract

Introduction. In today’s globalized economy, international tax competition has become a significant factor shaping the stability of national and global economic systems. Tax policy, under increasing pressure from capital mobility and digitalization, is undergoing transformative change as countries compete for mobile production factors through tax incentives and reduced corporate tax rates. Purpose. This article aims to examine international tax competition as a phenomenon affecting global economic stability, to identify its forms and instruments, and to analyze both the benefits and risks it poses for national fiscal systems. The study also investigates current international initiatives aimed at combating harmful tax competition, particularly within the OECD framework. The research employs a combination of general scientific methods (literature review, comparative analysis, synthesis) and specific tools (case study analysis, examination of tax competitiveness indices, and statistical evaluation of corporate tax rates across OECD countries and beyond). Results. The study reveals that tax competition has both positive effects, such as stimulating tax reform, attracting investment, and enhancing economic growth, and negative consequences, including tax base erosion, inequality, and downward fiscal pressure. An author's definition of the term "international tax competition" is proposed, which takes into account modern innovations and tools. It also highlights that countries like Ireland and Hungary have benefited from competitive tax regimes, while new initiatives such as OECD’s Pillar 2 seek to curtail aggressive tax strategies by imposing a global minimum tax of 15% for large multinationals. The role of the International Tax Competitiveness Index is considered in evaluating national tax systems. Conclusion. International tax competition is a complex, multidimensional process that requires coordinated global responses. The implementation of Pillar 2 may serve as a turning point, limiting harmful practices while preserving fiscal sovereignty. For developing and transition economies, the challenge lies in finding a balance between maintaining investment appeal and safeguarding long-term fiscal sustainability.