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The development of economic activities and the corresponding attribution of income (and wealth) to economic actors for tax purposes have undergone various processes of de-territorialisation and de-materialisation that have accelerated as a result of digitalisation. Recent international (OECD and EU) and, to a lesser extent, domestic initiatives have attempted to adapt the structure of corporate taxation to those changes. However, corporate taxes continue to be built on traditional concepts such as legal personality, residence and income which, due to structural weaknesses, may appear to inadequately determine what types of contributions may be required from corporate actors. Therefore, while we acknowledge the merits of recent international initiatives such as Pillars 1 and 2 of the OECD Base Erosion and Profit Shifting project, it is of value to explore alternatives such as more targeted taxes based on transactions and value as well as a renewed conception of 'contribution' by corporate actors. Three possibilities are analysed: transaction-based taxes, taxes on corporate value, and a re-elaboration of the idea of tax as a contribution (in money or in-kind) inspired by the concept of corporate social responsibility. [ABSTRACT FROM AUTHOR]

Traditional international tax rules empower a source state to tax non-residents who have a strong physical connection to that state. Digitalized business models reduce, or even eliminate, the need for a physical presence to conduct economic activities in the state where customers are located. This change has created significant challenges for tax administrations, and many jurisdictions have adopted unilateral digital services taxes to increase collection from digitalized businesses. The OECD/G20 Inclusive Framework aims to reform the 'outdated' international tax rules by promoting the Pillar One project on the tax challenges of digitalization in order to enable greater taxing rights by market jurisdiction. However, Pillar One seems to foster uncertainty rather than reassurance. This article considers the possibility of coordinating digital services taxes among individual jurisdictions: instead of focusing on the uncertainty and complexity of Pillar One, the OECD could use the Inclusive Framework to provide guidance on the collection of digital services taxes to protect taxing rights of market states and prevent double taxation of multinational enterprises. [ABSTRACT FROM AUTHOR]

To "crack down" on tax havens and offshore financial centers, the Organisation for Economic Co-operation and Development (OECD) has promoted an internationally agreed tax standard of exchange of information on request since 2009. Using a difference-in-differences analysis, we find that the implementation of the standard significantly reduces aggressive tax avoidance by affected U.S. multinational firms with material subsidiaries in tax havens and other offshore financial centers. The effects are stronger when firms have more incentives and opportunities for income-shifting or when tax enforcement is stronger. Overall, our study helps the OECD and other regulators better understand the effect of the internationally agreed standard on corporate tax avoidance. Data Availability: All data are available at the source indicated. [ABSTRACT FROM AUTHOR]

Multinationals' aggressive tax lobbying that involves free-riding behaviour and results in disproportional benefits to the disadvantage of other taxpayers, is problematic for several reasons. Such lobbying undermines the legitimacy of tax legislation and has a negative impact on trust in the tax system. Based on Immanuel Kant's ethical theory, this article first suggests a new normative basis for a moral duty that requires multinationals and their leaders to be transparent about their political activities and tax lobbying. Next, it introduces a new concept of transparency in respect of tax lobbying. 'Deliberative transparency' requires multinationals and their leaders not only to be open about their reasons for tax lobbying, but also to deliberate with stakeholders and, maybe even more importantly, to provide evidence supporting their lobbying positions. Finally, based on these new understandings, additional government interventions against aggressive tax lobbying are suggested, for example mandatory stakeholder consultation, reporting on stakeholder attitudes and perception, and evidence-based lobbying requirements. [ABSTRACT FROM AUTHOR]

Amid growing globalization, many countries have offered tax incentives to attract corporate investment. Prior research studies the role such incentives play in firms' location and investment choices. However, we have limited evidence regarding the role that uncertainty about the intensity of future tax enforcement plays in those decisions. In 2013, the European Commission (E.C.) abruptly began investigating the tax-ruling practices of several countries in response to allegations that certain firms received preferential tax treatment ("state aid cases"). We use this setting to study the economic consequences of increased uncertainty about future tax enforcement. We find evidence consistent with significant reductions in U.S. multinational enterprises' subsidiary investments within, firm input purchases from, and aggregate investment of U.S. firms flowing to targeted state aid countries. Specifically, for U.S. multinational enterprises' subsidiary investments, we find fixed assets declined by 1.7 percent of total assets, or $7.6 million per subsidiary. JEL Classifications: M41; M48; H25; H26. [ABSTRACT FROM AUTHOR]

This article explores the relationship between two legal fields that represent the legal backbone of contemporary cross-border and internet commercial activity: conflict of laws and international taxation. Despite the growing significance of the two fields of law, legal scholarship has yet to explore their intriguing relationship. Which state can levy tax on a multi-billion-dollar Delaware (US) corporation with headquarters in London (UK) that sells $500,000,000 worth of products to Australian consumers each year? Which law should adjudicate an online contract between a NSW corporation and a German corporation, signed online and addressing the delayed delivery of goods in Brazil due to the coronavirus outbreak? Despite the paramount significance of both disciplines, their traditional underpinnings appear to be fundamentally challenged and pressed by the realities of COVID-19, dynamic commerce, and the digital environment. Our cross-disciplinary partnership aims to design a unifying conceptual framework that captures the essentials of both disciplines. Through reciprocal lessons, this framework will help address the uncertainty in both disciplines. [ABSTRACT FROM AUTHOR]

The article argues on the global excess profits (GEP) tax proposal of professors Allison Christians and Tarcísio Diniz Magalhães. It provides historical overview of experiences of various versions of excess profits taxes and describes challenges of taxing profits of digital multinational companies. It evaluates GEP using accepted principles of tax policy and suggests revision of GEP tax by leveraging tools developed by the Organisation for Economic Cooperation and Development (OECD).

The international tax regime has wide implications for business, trade, and the international political economy. Under current law, multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence there. Digital companies, like Google and Amazon, can operate entirely online, thereby avoiding market country taxes. Multinationals can also exploit existing tax rules by shifting their profits to low-tax jurisdictions, thereby avoiding taxes in the residence country where their headquarters are located. Recently, a global tax deal was reached to tackle these issues. Proposed by the OECD/G20 Inclusive Framework and endorsed by nearly 140 countries, this global tax deal sets forth two Pillars that reform the outdated international tax regimes. Pillar One addresses digital taxation while Pillar Two addresses a global minimum tax. However, it is doubtful that the global tax deal will be successfully implemented, especially with respect to Pillar One. As the details of Pillar One have become increasingly complex and degraded by political compromises and carveouts, it risks being a framework without substance. Also, countries are unlikely to repeal an established tax instrument, Digital Services Taxes (“DSTs”), which is an adamant requirement of the United States in adopting Pillar One. This Article offers the first comprehensive critique of the global tax deal and assesses its prospects and problems. It evaluates the U.S. response to the proposed global deal and to DSTs. It presents the challenges, such as treaty overrides, that will occur if the United States implements Pillar One by executive agreement so as to bypass the treaty ratification. This Article suggests separating the two Pillars to preserve the global minimum tax. Regarding DSTs, the Article provides several empirical studies that demonstrate the harm retaliatory tariffs cause. Finally, it endorses the U.N. digital taxation proposal and proposes a new Data Excise Tax as normative alternatives. [ABSTRACT FROM AUTHOR]

Copyright of Revista Técnica Tributaria is the property of Asociacion Espanola de Asesores Fiscales and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We examine the effect of a permanent change to a country corporate income repatriation tax system on corporate financial policies. In 2009, Japan and the United Kingdom switched from a worldwide system to a territorial system for the taxation of repatriated foreign earnings, effectively reducing the tax liabilities of most multinational firms when repatriating earnings. We find that after the change firms accumulate less cash, pay out larger amounts through dividends and share repurchases, and invest less abroad.We do not find that the tax system change has significantly affected domestic investments even when controlling for capital constraints. [ABSTRACT FROM AUTHOR]

In recent decades, a number of fantastically successful, mainly American, MNEs--led and epitomised by the "Four Horsemen", Apple, Amazon, Facebook and Google, but also extending beyond the tech sector--have earned huge profits, while paying very low global taxes, through their use of IP. Since intellectual property, in contrast to tangible property, generally lacks a clear location, it empowers corporate tax avoidance at the expense of both the production countries where the MNEs' high-value owner-employees live, and the market countries where their customers live. This two-part article assesses the challenges posed for countries' international tax systems by the rise of mobile intellectual property, including but not limited to the case where it is embodied in a digital platform. Part One in this issue assesses the challenges posed for the traditional income tax concept of source, and for the OECD's proposed focus on the site of "value creation". Part Two in the next issue will focus on proposals to shift taxing rights towards market jurisdictions that may enjoy location-specific rents with regard to the MNEs' access to their consumers, including via the use of DSTs. [ABSTRACT FROM AUTHOR]

Conflicting theories of international taxation have led countries to adopt differing approaches to taxing multinational corporations ("MNCs"). MNCs, seizing upon resulting mismatches in countries' tax rules, employ base erosion and profit shifting ("BEPS") strategies that shift profit to low tax jurisdictions and minimize global tax liability. Amid a global struggle to combat BEPS, the United States introduced the Base Erosion and Anti-Abuse Tax ("BEAT"). The United States' most recent effort, while promising, provides a significant exception for BEPS strategies that manipulate cost of goods sold ("COGS"). This Note argues that the BEAT would better serve tax policy considerations if the United States removed its COGS exception. This Note begins by describing countries' competing approaches to international taxation, the BEPS problem that results, and difficulties in combating BEPS. Next, this Note discusses the BEAT, specifically exploring the United States' new territorial tax regime of which the BEAT is a part, the BEAT's calculation, and the BEAT's COGS exception. Finally, this Note argues that the BEAT would better serve tax policy considerations if the United States removed its COGS exception because the COGS exception: (1) undermines the United States' territorial tax regime and capital import neutrality, (2) violates tax policy considerations of neutrality and fairness, and (3) hinders the BEAT's effectiveness in combating BEPS. [ABSTRACT FROM AUTHOR]

We investigate how R&D contributes to rising foreign profitability in U.S. multinational corporations through wage and tax incentives. Our results suggest that wage savings increase foreign profit margins derived from foreign R&D, while tax incentives increase foreign profit margins derived from domestic R&D. By exploring their relative importance, we find that wage savings are more important than tax incentives in explaining foreign profit margins when the wage discount substantially exceeds tax incentives, and vice versa. Cross-sectional tests show that firms respond more to foreign R&D wage savings when they have access to local human talent, but less as the cost of conducting foreign R&D increases. Firms respond less to tax incentives to shift income derived from domestic R&D as transfer pricing risk increases. Our evidence sheds light on the importance of R&D-related income shifting that potentially separates the location of economic activity from the location of income. JEL Classifications: H25; H26. [ABSTRACT FROM AUTHOR]

This article uses the example of Google to discuss value creation within multinational platform firms and the tax challenges resulting from a disconnect between the current international corporate tax system and economic reality brought about by digitalisation. [ABSTRACT FROM AUTHOR]

Increased opportunities for aggressive tax planning (ATP) schemes by multinationals has heightened pressure on governments and policy-makers to curtail these activities. However, the design of most anti-avoidance rules is reactive rather than proactive. One exception is the use of mandatory disclosure rules (MDRs), which require the upfront disclosure of tax information. Part 1 of this two-part study in the previous issue of this journal explored the case for introducing MDRs by presenting a case study of Australia's experience in considering whether to adopt such a regime. This article (part 2) explores the key design features of an effective MDR regime with reference to the OECD's recommendations and a comparative legal analysis of how these rules apply in the UK and South African contexts. This provides the framework for a review of the effectiveness of MDRs and presents useful 'lessons learnt' which are informative in framing a regime suitable for adoption in other Commonwealth law jurisdictions such as Australia. [ABSTRACT FROM AUTHOR]

This is an empirical study on the cross-border profit shifting engaged in by Australian subsidiaries of foreign multinational enterprises for tax avoidance. The study reveals that in comparison with domestic-owned listed Australian companies, foreignowned Australian companies utilise intra-group transfer pricing and pay high interest rates on intra-group debts to shift profits out of Australia to avoid Australian tax to a greater extent, which are manifested in their lower gross profit margins and operating profit margins, higher interest expenses but similar leverage ratios, as well as lower pre-tax profits and income tax expenses. [ABSTRACT FROM AUTHOR]

The ability of developing countries to achieve the SDGs will depend in large part on their ability to mobilize resources including through taxation. But new proposed rules in the WTO are threatening all countries' ability to generate fiscal revenues through taxing the activity of transnational corporations. Under the guise of new talks on 'e-commerce', the largest TNCs are seeking to rig international rules to prevent governments from being able to assess tariffs on international transactions, as well as to assess taxes on corporate profits. If the talks in the WTO result in a binding agreement, the fastest-growing and most profitable sectors of the economy will be permanently released from the responsibility of contributing to the social and physical infrastructure on which their businesses are based, and governments will be unable to meet the social and development needs of their populations. [ABSTRACT FROM AUTHOR]

For years, the advent of the digital economy has left countries stumped in their attempt to tax income earned by foreign firms without physical presence within their jurisdiction. International organizations and their member countries have failed in their attempts to tweak the rules of the international tax regime and address the challenges presented by the digital economy. This Article argues that such a conservative approach could not work and fundamental reform is inevitable. The Article proposes a withholding tax solution, explaining its merits and demonstrating its superiority over alternative reforms proposed to date. [ABSTRACT FROM AUTHOR]

The article discusses the practice of U.S.-based multinational corporations (MNCs) to shift income between the U.S. and foreign jurisdictions, particularly noting the relationship between financial reporting incentives and income shifting. It addresses cross-sectional variation of foreign reinvestment-related incentives, as well as notes the importance of U.S. domestic tax rates to a company's likelihood to shift income geographically. Other topics explored include pretax return on sales, implications for U.S. financial policy makers, and attempts to avoid recording financial reporting expenses.

This paper examines the production and capital location effects of two approaches to taxing the incomes of subsidiaries of multinational enterprises (MNEs) in tax haven countries. The United States and the United Kingdom immediately tax ''Foreign Base Company Sales Income'' (FBCSI) of foreign subsidiaries reselling inventory outside the subsidiary's host country except when it is manufactured in the host country. The second approach used by Canada does not tax any active income earned in the tax haven country. We show that FBCSI induces U.S. MNEs manufacturing their product in the United States to reduce sales and increase prices in United States. Alternately, they manufacture in the tax haven country, resulting in lower U.S. tax collections, lower quantities, and higher prices. These effects are absent for Canadian MNEs. [ABSTRACT FROM AUTHOR]

This paper investigates the effect tax havens and other foreign jurisdictions have on the income tax rates of multinational firms based in the United States. We develop a new regression methodology using financial accounting data to estimate the average worldwide, federal, and foreign tax rates on worldwide, federal, and foreign pretax book income for a large sample of U.S. firms with and without tax haven operations. We find that on average U.S. firms that disclosed material operations in at least one tax haven country have a worldwide tax burden on worldwide income that is approximately 1.5 percentage points lower than firms without operations in at least one tax haven country. Our results also show that U.S. firms face a 4.4% current federal tax rate on foreign income whether or not they have tax haven operations. Finally, we find that U.S. firms with operations in some tax haven countries have higher federal tax rates on foreign income than other firms. This result suggests that in some cases, tax haven operations may increase U.S. tax collections at the expense of foreign country tax collections. [ABSTRACT FROM AUTHOR]

This paper uses a strategic tax compliance model to examine taxpayer reporting and tax authority audit strategies in an international setting with two tax authorities. The setting features both information asymmetry between the taxpayer and the tax authorities and inconsistent tax transfer-pricing rules. The latter creates the possibility of each country trying to tax the same income. We study the effect of the probability of transfer-price rule inconsistency on the strategies and payoffs of the taxpayer and the tax authorities. We find that an increase in the probability of transfer-price rule inconsistency induces more aggressive auditing by governments. It therefore deters taxpayers from shifting income to the country with the lower tax rate in situations in which the transfer-pricing rules are consistent, and can either increase or decrease the income reported to the low-tax-rate country in cases in which the transfer-pricing rules are inconsistent. We find that an increase in transfer-price rule inconsistency could either increase or decrease the taxpayer's expected tax liability and could either increase or decrease the deadweight loss from auditing. Our results call into question the conventional wisdom that the prospect of double taxation due to transfer-price rule inconsistency increases a firm's expected tax liability and governments' expected audit costs. [ABSTRACT FROM AUTHOR]

We examine whether tax incentives influence where U.S. multinational locate their interest deductions worldwide. Our sample includes international bond offerings by U.S. multinationals during 1987-1997 denominated in the currencies of Australia, Canada, France, Germany, Italy, Japan, or the United Kingdom. Our results suggest that U.S. multinationals' debt location decisions take into account the effect of jurisdiction-specific tax-loss carryforwards and binding foreign tax credit limitations on the value of debt tax shields. Our results are also consistent with U.S. multinationals locating interest deductions in different tax jurisdictions as a mechanism to achieve tax-motivated income shifting. [ABSTRACT FROM AUTHOR]

In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones. The majority of the difference is attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits. I document how the estimated difference is related to profit shifting and show that using accounting data leads to much smaller estimates of the difference. [ABSTRACT FROM AUTHOR]

This article examines the Australian Senate's 2015–2017 inquiry into corporate tax avoidance to illuminate the tax strategies used by the multinational corporations (MNCs) most targeted by tax justice campaigners, versus those of particular relevance in an Australian context: mining companies. Using documentary analysis, we examine how these companies discursively defended their tax avoidance strategies. Despite differences in the context in which the issue of tax minimisation has risen to prominence, we show that in Australia, MNCs' legitimacy in paying lower levels of tax has been challenged in a similar manner to that of MNCs in other industry sectors that were held responsible for post-global financial crisis austerity measures in states like the US and UK. This suggests that history and context matter not in and of themselves, but for the impact they have on the discursive power of the actors involved, depending on the visibility and salience of the issue associated with them. [ABSTRACT FROM AUTHOR]

Copyright of FinanzRundschau is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This Note begins with commentary on the United States' former worldwide system of taxation. This system taxed multinational corporations' offshore profits at the applicable domestic income tax rate less credits for taxes paid to foreign governments. This tax regime provided for the deferral of income tax due on the profits of multinational corporations' overseas operations until the time of repatriation. This Note considers the issues inherent in this system and analyzes the repatriation tax holiday under the American Jobs Creation Act of 2004. This holiday has been unanimously criticized by both sides of the political aisle and led to large multinational corporations stockpiling offshore profits at an even higher rate, likely in anticipation of more favorable legislation. This Note then contends that subsequent legislation aimed at altering the repatriation tax was viewed warily by members of Congress, who were cognizant of the holiday's many failures. This Note concludes with an analysis of the Tax Cuts and Jobs Act, which replaced the United States' former worldwide taxation system with a territorial taxation system. This new system, which does not tax multinational corporations' foreign profits, rightly worries many commentators. However, anti-base erosion measures, a lower corporate income tax rate, and an influx of foreign-held cash may quell any negative effects this transition may have. [ABSTRACT FROM AUTHOR]

This article presents information about a study which examines the effects of tax incentives on production location choices of American multinational corporations (MNCs). It also examines the relation between the ratio of export sales to foreign production sales and measures of the export tax incentive for manufacturing MNCs during the period from 1984 to 1992. The sample includes U.S. manufacturing firms with the necessary data to construct the measures of interest. All sample firms have at least $1 million in foreign sales and positive values in both foreign and domestic income. The results indicate that taxes induce U.S. multinationals to prefer exports rather than foreign production to serve unaffiliated customers in foreign markets. Specifically, the ratio of exports to foreign production sales to unaffiliated foreign customers is positively related to firm-specific export tax incentives. The results also suggest that U.S. multinationals do not rely exclusively on financing or accounting strategies to solve their tax problems. Instead, they also make real changes in production.

This article presents information related to foreign tax credit limitations and preferred stock issuances. The authors suggest that the U.S. Tax Reform Act of 1986 inadvertently increased the use of preferred stock as a financing instrument among multinationals. The act changed how much interest could be allocated against foreign source income when determining foreign tax credits. The result is that firms restructured their financing activities to avoid domestic debt. Their response to tax changes was purely accounting-based rather than production.

This article examines the effect of tax factors on the equity values of U.S. multinational corporations making foreign acquisitions. Abnormal stock returns are found to be related to a tax variable that captures differences in the international tax status of acquiring firms but not related to a naive tax variable that captures differences between tax rates in target countries and the United States. Our evidence suggests that aggregate intercountry differentials in after-tax returns are competed away, while firm-specific, tax-related advantages (or disadvantages) are reflected in abnormal returns around the announcement date of the acquisition. [ABSTRACT FROM AUTHOR]

Copyright of FinanzRundschau is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper examines if, when, and to what extent multinational tax incentives incrementally explain where firms move offshored U.S. jobs. Using jobs data from a Department of Labor program called Trade Adjustment Assistance, I find a significant association between tax incentives and both the likelihood that a foreign country hosts offshored U.S. jobs and the number of U.S. jobs it hosts. This association is stronger when managers have discretion to coordinate cross-border transactions internally and when they do not face political costs imposed by labor unions. Following instances of offshoring, I find some evidence that offshoring firms have lower effective tax rates, but these reductions are concentrated within larger layoffs in which jobs are sent to low-tax countries. These findings are relevant to understanding the real effects and welfare consequences of incentives created by current U.S. tax policy. JEL Classifications: F23; H26; J63; L14. [ABSTRACT FROM AUTHOR]

This paper provides a brief review of the academic literature that assesses the quantitative importance of tax avoidance behaviour of multinational entities (MNEs) by means of income shifting from high-tax to low-tax affiliates. Existing studies unanimously report evidence in line with tax-motivated profit shifting (despite using different data sources and estimation strategies). In terms of shifting channels, there is evidence consistent with strategic mispricing of intra-firm trade, the location of valuable intellectual property at low-tax affiliates and debt-shifting activities. The quantitative estimates vary across approaches and studies though. The paper moreover stresses that some care should be warranted when interpreting profit shifting estimates as they often rely on non-trivial assumptions. [ABSTRACT FROM AUTHOR]

Following a three-year investigation, on August 30, 2016, the European Commission (EC) released its decision in the Ireland-Apple State aid case. The EC found that Ireland had breached the Treaty on the Functioning of the European Union because the manner in which Ireland had determined the tax payable by two Apple subsidiaries was not consistent with the arm's length principle and/or it was not based on objective criteria. This meant that Ireland had selectively favored Apple and provided the firm with State aid. The EC decision provides an example of how aggressive multinational enterprise (MNE) tax minimization is anti-competitive. The Ireland-Apple case also provides an illustration of how a lack of transparency and incoherency in MNE definition contribute to aggressive MNE tax minimization. States' reactions to the EC decision are further telling because they show how MNE tax minimization engages the self-interest of States. This suggests that efforts to combat aggressive MNE tax minimization, such as the OECD's Base Erosion and Profit-Shifting Action Plan, face complex State motivations in effecting change on the international level. Profit haven States have the most to lose if MNE tax minimization is effectively addressed. In addition, MNE home States may be at times loath to support changes to the system which favors "their" MNEs at the expense of other States' tax revenues. It is as if some home States view MNEs as their privateers, with such MNEs operating internationally under the tacit approval of their home States to aggressively avoid paying taxes to other countries. Home State leadership may be mistaken in thinking that MNE tax minimization is in their favor because MNEs are largely free agents and aggressive MNE tax minimization is dearly costing nearly all states. [ABSTRACT FROM AUTHOR]

This timely volume ( Global Tax Fairness, edited by Thomas Pogge and Krishen Mehta) on the proper taxation of multinational enterprises argues that several feasible, near-term reforms could substantially narrow the scope for tax avoidance by closing information gaps, and it proposes more ambitious, long-term reforms that pursue coordination on the design, not just the enforcement, of tax policy. The editors construct an impassioned normative case that (legal) avoidance violates fairness because its negative effects fall especially hard on the world's poor, but their case could be bolstered by an appeal to the classical benefit-based logic behind the central aim of the reforms they recommend. (JEL D63, F23, H25, H87, K34). [ABSTRACT FROM AUTHOR]

EU State aid draws international attention recent years due to its application to fiscal measures granted by Member States to multinational enterprises. It has triggered discussions on the reasonableness of applying State aid law to tax measures. This article aims to explore the fundamental rationale behind EU State aid and its application to tax incentives. By going back to basics, this article contributes to a clearer picture on reasons for the State aid control over tax incentives. Governments tend to use fiscal State aid measures to achieve policy goals and tax incentives could realize the goals since they do bring beneficial effects. However, considering efficiency and equity in the internal market, tax incentives can cause harmful effects as well. It is necessary for State aid law to regulate the harmful effects of tax incentives, therefore guaranteeing the level playing field in the internal market. [ABSTRACT FROM AUTHOR]

The article examines key issues on the flag of convenience in the context of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) package. It considers international tax principles and the global shipping industry in an attempt to identify the purposes of flags of convenience for the global shipping industry. It also discusses the usefulness of the flag of convenience as a tax planning strategy.

This paper analyzes the transfer pricing of multinational firms. Intrafirm prices may systematically deviate from arm's-length prices for two motives: pricing to market and tax avoidance. Using French firm-level data on arm's-length and intrafirm export prices, we find that the sensitivity of intrafirm prices to foreign taxes is reinforced once we control for pricing-to-market determinants. Most important, we find no evidence of tax avoidance if we disregard tax haven destinations. Tax avoidance through transfer pricing is economically sizable. The bulk of this loss is driven by the exports of 450 firms to ten tax havens. [ABSTRACT FROM AUTHOR]

Subscribing to the core idea that income should be taxed where value is created, the international community has devised a set of tax base protecting rules to counter a world in which highly profitable multinational companies like Apple, Google, and Amazon pay very little in taxation. But these rules rely on assumptions about value that tend to allocate most revenues from international trade and commerce to rich countries while, whether intentionally or not, depriving poorer countries of their proper share. This Article argues that a rigorous examination of what we mean by value could prompt changes in the consensus on allocation. To demonstrate with a concrete example, the Article examines wages paid to workers in low-income countries and reveals a clear and well-documented gap between market price and fair market value resulting from labor exploitation. It then demonstrates how to apply this knowledge to existing international tax rule sets to reallocate profits to align more closely to the value-based ideal. If accepted in principle, the proposed approach could be expanded beyond wages to consider other areas in which prices do not align with value creation. Ultimately this could provide a more detailed template to reallocatemultinational revenues in a way that does not inappropriately benefit richer countries at the expense of poorer ones. [ABSTRACT FROM AUTHOR]

Abstract: In recent years, there has been growing concern that multinational enterprises (MNEs) engage in strategic tax planning in order to shift profits to low‐tax jurisdictions. This common perception is generally confirmed by empirical evidence, which is foremost provided for countries with high corporate taxes and relatively complex tax systems. We investigate whether multinational firms in a country with a comparatively more competitive tax system undertake profit shifting. We do this using detailed census data from corporate income statements and balance sheets filed by Swedish manufacturing firms between 1997 and 2007. We detect profit shifting by comparing MNEs with (purely) domestic firms. In particular, we identify systematic differences in tax payments, earnings (before interest and taxes) and equity ratios between multinational and comparable domestic firms based on propensity score matching. In addition, we examine the tax behavioural impact of acquiring multinational status using difference‐in‐differences estimations and/or propensity score matching. Our results reveal that the extent to which multinational firms have lower tax payments than their domestic counterparts depends on their production characteristics and foreign market outreach. In particular, we find evidence indicating that firms operating in few foreign markets and firms that become multinational engage in profit shifting from Sweden. [ABSTRACT FROM AUTHOR]

The European Court of Justice (ECJ) has become an influential player in the field of direct taxation in the European Union (EU) in the past 20 years. However, it is unclear whether or not the ECJ's decisions and the corresponding reactions by the member states actually contribute to tax neutrality in economic terms and, therefore, to the achievement of the internal market. In 2006, the ECJ limited the applicability of specific tax rules in the EU that are intended to prohibit the excessive use of low-tax countries by multinationals. Our counterfactual analysis shows that the court's restriction of so-called controlled foreign company rules and the related second-round reactions by some member states - i.e. the introduction of low-tax regimes for income from acquired intellectual properties (IP boxes for acquired IP) - cast doubt on the seemingly positive effects the ECJ has on reducing tax distortions. In addition, we demonstrate that the restricted applicability of IP boxes as endorsed by the OECD and the European Commission would strengthen tax neutrality in Europe. [ABSTRACT FROM AUTHOR]

A topic of discourse for over half a century, the Societas Europaea (the European Company)1 has much to offer. Notwithstanding its merits, this supranational corporate form has attracted much criticism. One of the major issues that has emerged on a recurrent basis is the question of the functional worth of this structure. In this context a discourse has ensued about its advantages and disadvantages from the perspective of its intended end-user. This paper will discuss the pro-business aspects of this entity (Part 2) before giving due consideration to its structural and functional deficits (Part 3), ending with suggestions for reform (Part 4). [ABSTRACT FROM AUTHOR]