The historic deal by finance ministers of the Group of Seven (G-7) industrialised countries over the weekend lays the ground for a dramatic overhaul of the global corporate tax system which, when it happens, will redistribute tax revenues among countries and force many to reinvent their strategies to attract investments.

The story of how the world's corporate tax regime became distorted goes back at least 40 years. In 1980, the average statutory corporate tax rate globally was 40 per cent. As countries raced to outdo one another to attract foreign investments by multinational enterprises (MNEs), tax rates kept falling everywhere, reaching 24 per cent on average in 2020.