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This article focuses on the complex challenges affecting the relationship between different tax systems (national, international and EU) within a context, like the current GloBE project, which is looking for appropriate tax measures applying on a global scale. In fact, the need of developing tax measures with a global character requires specific attention to be given to issues concerning the effectiveness of these measures in light of the relationship between the relevant tax systems. More specifically, within the framework of this article, the analysis aimed at evaluating the possibilities of guaranteeing a fully effective application of the GloBE income inclusion rule has been conducted on the basis of two crucial factors, i.e. (1) the compliance of the income inclusion rule with international tax treaty law and with EU tax law, and (2) the coordination between international tax treaty law and EU tax law. Global Anti-Base Erosion (GloBE) project, Pillar Two, Income Inclusion Rule, BEPS, CFC legislation, Abuse, OECD/G20 Inclusive Framework, Saving Clause.

As a result of the 2008 financial crisis government had to make substantial cuts in public expenditures. Austerity measures can be considered to be one of the explanations behind a decreased confidence in the government. Furthermore, several tax-related scandals and leaks (for example the so-called Panama Papers and Paradise papers) got much media coverage. The message often was that multinational corporations are not paying their fair share, compounding Treasury’s condition, and tax authorities are too cosy in their dealings with these multinationals. As a result, trust in government, the tax administration in particular, the (international) tax system and large (multinational) corporations diminished. Many actors see greater transparency of the tax system as critical to rebuilding trust in the international tax system – disclosure providing information evidencing that multinational corporations pay a fair share of taxes. Since the demand for increased transparency regards particularly tax authorities, on the one hand, and large corporations, on the other, two types of trust are distinguished. Institutional trust refers to trust in institutions, such as the tax authorities and social or interpersonal trust is about trust in other (corporate) members of society. Since trustworthiness is a prerequisite of trust, we’ll investigate how transparency can promote trustworthiness of tax authorities and multinationals. The first part this paper offers theoretical considerations on various elements, types, and paradoxes of transparency and trust. Subsequently a brief analysis is made of several recently introduced hard and soft law initiatives which are aimed at greater transparency to promote trustworthiness of tax authorities and multinationals. The second part comprises an exploratory study by the Dutch tax authorities on transparency. This empirical research is focused on the question how the Netherlands Tax and Customs Administration (NTCA) can deal with the increasing demand for transparency towards society. This second part focuses on the subject of transparency in regard to the particular context of tax administration and tax enforcement.

In recent years international taxation has become a hotly disputed topic. Luxleaks, Pamana papers, Paradise Papers, State Aid-cases, etc. received a lot of media coverage. As a result, tax is at the top of the political agenda of for example the G20, OECD and EU and many substantial changes are taking place. Rebuilding trust among major stakeholders is crucial for a sustainable international infrastructure in respect of taxation. The current unrest with regard to multinational companies’ tax planning practices shows that society demands companies to integrate tax governance in their corporate governance. Society demands moral evaluation of tax planning practices - even if it is legal tax avoidance, aimed at minimising companies’ tax liability. Companies do well, therefore, to integrate ethical risks with regard to tax in their risk management. Paying taxes and morality are apparently connected. This article will elaborate on the moral dimension of paying taxes. Tax administrations are also interested in the governance of taxation, because the tax behaviour of multinational enterprises can indicate much regarding their acceptance of risk and attitude towards tax planning. But how can they trust that multinational companies are complying with the law and want to build a good relationship with tax administrations and society? We focus on tax codes of conduct which are currently used by companies and regulators in an attempt to obtain greater control over economic and social relationships. Corporations publish codes to communicate their standards of ethical behaviour internally and externally - enabling (moral) evaluation by stakeholders. Tax codes of conduct relate to tax risks and substantive and procedural ethical norms. May be tax codes of conduct are a way to meet stakeholder needs with regard to tax in the current highly politicized and mediatised environment.

The research question of this chapter is: If we need a destination-based CIT, do we also need a production-based consumption tax in order to preserve or to attain a balanced comprehensive international tax system in respect of the allocation of tax jurisdiction? In order to answer this question, pros and cons of a destination-based CIT have been balanced. From the perspective of the character of a multinational firm, the direct benefit principle, investment location neutrality, tax revenue, inter-nation equity, BEPS and economic growth, the author concludes that the prevailing arguments are not to adopt a destination-based CIT. Actually, this is also his position if the concept of the ‘source’ of profit is taken into account. However, if it is accepted that the ‘source’ of profit is (partly) the customer market and that an MNE indirectly benefits from the infrastructure of the customer market state, the destination state, it can be argued that a destination-based CIT is justified. If such a tax is adopted, a production-based consumption tax should also be adopted in order to attain a balanced comprehensive international tax system in respect of the allocation of tax jurisdiction. The result will be that international tax systems become needlessly complicated. The author believes that it is also not necessary to introduce destination-based CIT and production-based consumption taxes, because the current distribution of taxing rights has already been based on the distinction between the production of added value (income and profit taxes) to be allocated to the state where the income is actually produced (the source/origin state) and the consumption or use of added value (VAT and sales and use tax) to be allocated to the state of consumption/use (consumption/use state). What should be done is a restructuring of CIT and tax treaties in order to better align them with the principle of origin. If, nevertheless, the introduction of the combination of destination-based CIT and production-based consumption taxes is contemplated, further research is necessary, inter alia in respect of potential impact on individual tax positions of MNEs, investment locations, tax revenue for states, inter-nation equity and economic growth. In respect of pros and cons in respect of production-based consumption taxes, extensive research already exists, but this research is also frequently limited to consumption taxes only and not in relation to destination-based CIT.

The phenomenon of cross-border pension benefits has gained exponential traction in recent decades, the assumed main causes being greater mobility among taxpayers, globalization, the blurring of borders within Europe, and technological advances that have made it relatively easy for people to settle permanently abroad following their retirement. From a tax perspective, one question that is relevant in this context is which country has the right to impose tax on pension benefits following emigration. In this article I will discuss what I believe to be an appropriate allocation of taxing rights for cross-border pension payments.

The relationship between tax and sustainability is not an easy one. Tax specialists do not readily combine those two topics with regard to public tax governance, let alone the tax governance of corporations. One thing that is troubling the relationship between tax and sustainability is transparency. For tax experts, at first sight, tax and sustainability meet in environmental taxation. On further reflection the requirement of sustainability can be applied to tax legislation and the tax system as whole - which both demand good tax governance. Sustainable tax governance thus requires the state to pay due attention to the quality of tax legislation. However, the concept of good tax governance does also regard taxpayers. Taxation is a fundament for a well-functioning society and sustainable development. Therefore, it will be argued that paying corporate taxes can be seen as part of corporate responsibility to contribute the sustainable development of society. Corporate scandals and news on corporate aggressive tax planning practices have increased demands for corporate accountability. To answer the question whether corporations’ tax planning policies are really sustainable if they minimise the amount of tax they pay, this paper will explore corporate taxation in the context of corporate social responsibility (CSR). Here, CSR is used as a proxy for sustainability. A notion of good tax governance as a response to demand of sustainable and responsible tax planning will be proposed. Furthermore, it will be argued that without greater transparency it is impossible to evaluate whether corporations are truly sustainable, nor is it possible to hold corporations accountable for their tax behaviour. Good tax governance entails transparency - a necessary if challenging prerequisite for sustainable tax planning.

There is no doubt that tax administration is a complex matter. It is institutionalised by a governance framework which is strongly influenced by legal traditions, state governance approaches, historical developments, and norms and values of society. While there are many common aspects of national tax administration frameworks, there is no single governance framework that applies everywhere. Questions such as the degree of autonomy granted to a tax authority and scope of discretionary powers need to be evaluated in the light of existing dysfunctionalities in governmental institutions, scale of political interference in public administration, and the system of ‘checks and balances’. In daily life, the efficiency and effectivity of the tax administration is impacted by rapid changes in its operating environment, and by the nature of the relationship the between tax authority and taxpayer. To deal with the effects of globalisation and IT developments, tax authorities increasingly rely on voluntary compliance by taxpayer. Internationally, several measures have been developed and implemented to enhance voluntary compliance, including compliance programs as well as reporting requirements. Additionally, benchmarking tools have been developed to measure tax administration performance and to identify good practices. The recent developments in the fight against tax evasion and aggressive tax planning push the boundaries of tax administration and challenges its capacities. At the same time, these developments create uncertainty for businesses in the application of tax law. At the end of the day, the practical meaning of any tax law provision is greatly determined by the manner how the tax authority administers it and enforces it.

Revenue authorities nowadays use different kinds of behaviourally informed strategies – functioning as ‘tax nudges’ – to raise voluntary compliance. This paper begins with setting out the background of promoting voluntary compliance by employing behaviourally informed tools. Because these tax nudges are being operated in a legal environment, various legal questions arise. It is argued that the use of behaviourally informed instruments needs to be in accordance with general legal principles, such as the principle of honouring legitimate expectations and the principle of equality. The importance of these legal principles is demonstrated by analysing concrete examples, such as the pre-filled tax return and horizontal monitoring. It is argued that those legal questions should be thought through and worked out – preferably before being implemented – within a legal framework in which (legal) principles are of a fundamental nature. This paper’s focus is on the behaviourally informed tools as designed and used by the Netherlands Tax and Customs Administration.

This presentation discusses the Turkish approach on the perception of tax avoidance at national and international level.

This part of the book summarizes the legal and regulatory framework for transparency and exchange of information in Turkey as well as practical implementation of that framework.

Taxpayers have to plan their tax affairs to plan their life or develop their business strategy. Often tax planning is encouraged and intended by tax legislation. Tax incentives are often used to steer (corporate) citizens’ behaviour to achieve all kind of policy goals. In this way, the tax legislator stimulates taxpayers to adopt a calculating attitude towards the tax system, breeding a rule-based mindset focused on tax planning. This rule-focus crowds out ethics. Companies endorsing corporate social responsibility accept ethical obligations beyond compliance with the law. It is argued that these companies should agree that the interpretation and use of tax rules is based on a moral choice; all the more because the tax system is a moral phenomenon because it regards the provision of public goods and the distribution of tax burden. However, they should take one more step in endorsing the view that tax is a body of rules which itself is grounded in principles which make up the internal morality of law. Therefore, they should take these principles seriously when engaging in tax planning.