Globalization of the economy that is characterized by the rising integration of the markets, digitalization of the business operations, and rise in the complexity of cross-border corporate organizational forms has made the international taxation of multinational businesses (MNCs) a burning question in the global economic governance. Conventional international tax laws were structured in the light of the concepts of residence-based and source-based taxation, assigning the country the right to tax. Nevertheless, these principles have not worked well in the contemporary international economy where multinational corporations are able to conduct business in more than one jurisdiction and make profits without a substantial physical presence.

Research results indicate that multinational companies are transferring hundreds of billions of dollars of profits each year to low-tax destinations which results in major loss of revenues by governments all over the world. To these obstacles, the governments and international bodies have come up with significant reforms to empower global taxation. Also, the adoption of the global minimum corporate tax via Pillar Two in the OECD framework would create minimum effective tax rate of approximately 15 percent among large multinational corporations in order to minimize incentives to shift profits and engage in pernicious tax competition among nations. This paper discusses the legal issues that are linked to multinational companies taxation and the effects of the current international tax reforms aimed at eliminating these problems. The study emphasizes the need of international policies to work together, greater transparency, and improved regulatory framework in an effort to provide a transparent and sustainable system of international taxation.