Bringing a unique voice to international taxation, this book argues against the conventional support of multilateral co-operation in favour of structured competition as a way to promote both justice and efficiency in international tax policy. Tsilly Dagan analyzes international taxation as a decentralized market, where governments have increasingly become strategic actors. While many of the challenges of the current international tax regime derive from this decentralized competitive structure, Dagan argues that curtailing competition through centralization is not necessarily the answer. Conversely, competition - if properly calibrated and notwithstanding its dubious reputation - is conducive, rather than detrimental, to both efficiency and global justice. International Tax Policy begins with the basic normative goals of income taxation, explaining how competition transforms them and analyzing the strategic game states play on the bilateral and multilateral level. It then considers the costs and benefits of co-operation and competition in terms of efficiency and justice.

International Tax Policy: Between Competition and Cooperation

To show why the taxation of cross-border transactions has remained largely unaltered across a century of upheaval, this article reveals a steady hand in control. To explain how those complex rules have changed—and could change in more profound ways—it does the same. Demonstrating how cross-border taxation has been shaped by the preferences and the intellectual habits of the United States, it highlights an unexpected opportunity for marginalized states to seize control of its future.

A Constitutional Moment in Cross-Border Taxation

The relationship between tax and sustainability is not an easy one. Separately, both topics are in general well understood and given due attention in most corporations. Nevertheless, 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. 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. The question is whether corporations’ tax planning policies are really sustainable if they minimise the amount of tax they pay. This chapter will look into this question by exploring corporate taxation in the context of corporate social responsibility (CSR). 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. This chapter will deal with the calls for increased tax transparency. Public transparency with regard to corporate tax is in many countries a rather new phenomenon. It will be argued that corporate tax transparency is a key to good tax governance. Yet, it also entails various challenges. A first step is the question as to relationship between tax and sustainability; sustainable tax governance will first be dealt from a governmental perspective which requires the state to pay due attention to the quality of tax legislation. Following, it will be discussed how to relate multinational tax planning practices to sustainability. It will be analysed whether paying taxes could be seen as a company’s obligation towards society. 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, this chapter relates such good tax governance to transparency, which is considered as a necessary if challenging prerequisite for a sustainable tax planning.

Sustainable Tax Governance and Transparency

It is widely recognized that international corporate taxation holds a distributional bias toward advanced economies and that developing countries only play a marginal role in tax governance-making. Yet, it is the ambition of both the G20 and the Organisation for Economic Co-operation and Development (OECD) to integrate developing countries in the BEPS Inclusive Framework. The Base Erosion and Profit Shifting (BEPS) action is the latest global initiative to update the international framework of corporate taxation and curb corporate tax avoidance. On one hand, the integration for developing countries within the policy-making forums remains incomplete and focused on the implementation of the global tax rules. On the other, even when lower-income countries have a seat at the table, uneven power relations shape the distributional outcomes of the G20-OECD tax reform project. This analysis of the power relations at play during the revision of the transactional profit split method (TPSM) reveals how dominant logics on value creation work against the material interests of developing countries in the distribution of taxing rights. Therefore, for a tax reform to be truly legitimate for developing countries, it should emancipate and even “decolonize” the discourse and ideas of the international tax regime. While the updated OECD guidelines on transfer pricing expanded the size of the overall cake of taxable profits, the dominant logics and criteria of the guidance make it difficult for lower-income countries to obtain a decent slice of the cake and actually eat it.

/pdf/getting-the-short-end-of-the-stick-power-relations-and-their-4hb9xi42zm.pdf

Getting the Short End of the Stick: Power Relations and Their Distributive Outcomes for Lower-Income Countries in Transfer Pricing Governance

Background paper commissioned by the United Nations High-Level Panel on Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda.

Peer Review in Financial Integrity Matters

In this article, the author considers output legitimacy deficits in the context of the Inclusive Framework of the OECD/G20 Base Erosion and Profit Shifting Initiative, with special emphasis on the issues and problems that this raises for developing countries.

https://scholarlypublications.universiteitleiden.nl/access/item%3A2946148/view

Output Legitimacy Deficits and the Inclusive Framework of the OECD/G20 Base Erosion and Profit Shifting Initiative

The overall aim of this article is to analyse the principal purpose test as an emerging rule of customary international tax law. By means of the principal purpose test, the tax administration can deny the tax treaty benefit if one of the principal purposes of the action undertaken by the taxpayer was to obtain a benefit. This principal purpose test has been developed by the OECD with the political support of the G20 as one of the actions to tackle Base Erosion and Profit Shifting by multinationals (BEPS Project). At the time of writing, 137 jurisdictions including non-OECD, non-G-20 countries have committed to the implementation of the principal purpose test in their current and future tax treaties. Based on the analysis of the objective element (state practice) and subjective element (accepted as law), there are indications that this principal purpose test can emerge as a principle of customary international law. In the past, international tax law scholars addressed the customary international law regarding the OECD/UN tax treaty Models, the OECD Harmful Tax Practices, and the arm’s length principle. However, current international tax developments, including the BEPS Project, call for an analysis of the main elements of customary international law in respect of the principal purpose test, a general anti-avoidance rule that by its own nature, is often general, vague, and imprecise. Therefore, the findings of this article can be useful for generating new areas of research by international public law, international law, and international tax law experts.

/pdf/beps-principal-purpose-test-and-customary-international-law-4wjlilcvy3.pdf

BEPS principal purpose test and customary international law

This article aims to analyse the multilateral action and instruments 
that have been and are being developed by the Organization for Economic 
Cooperation and Development (“OECD”) to enhance transparency and 
exchange of information and the Base Erosion Profit Shifting (“BEPS”) 
Project in light of the principle of legitimacy vis-a-vis non-OECD 
(developing) countries. The question addressed in this article 
is under what conditions can the OECD multilateral instruments and the 
BEPS Project be regarded as legitimate for non-OECD (developing) 
countries? For this purpose, the definition of Scharpf, including the 
distinction between input legitimacy i.e. government by the people and 
output legitimacy i.e. government for the people, will be taken into 
account. In order to answer this question, this article will 
provide a description of the legitimacy of international tax law making 
by international organizations and the role of the OECD in respect of 
OECD and non-OECD countries. Thereafter, the OECD multilateral 
instruments to enhance transparency and exchange of information and of 
the BEPS Project will be assessed in respect of the input and output 
legitimacy. The assessment of input legitimacy will take into account 
transparency, participation, and representation of developing (non-OECD)
 countries in the setting of the agenda and the drafting of the content 
of the OECD multilateral instruments to exchange information and the 
BEPS multilateral instrument. The analysis of output legitimacy will 
address the shared goals i.e. to tackle tax fraud, tax evasion and 
aggressive tax planning and the solutions presented by the G20 and OECD,
 adopted by OECD and non-OECD countries. The analysis of output 
legitimacy will also take into account the differences in objectives and
 resources between OECD and non-OECD (developing) countries. The
 first part will address the relationship between legitimacy and 
international tax law making. The second part will address the role of 
the OECD vis-a-vis developing countries and the membership of countries 
to the G20, OECD and the Global Transparency Forum. The third part will 
address the assessment of the input and output conditions for legitimacy
 of the OECD multilateral instruments to exchange information and the 
BEPS Project. Finally, a conclusion and recommendations for further 
research will be provided.

https://scholarlypublications.universiteitleiden.nl/access/item%3A2951906/view

Legitimacy and the Making of International Tax Law : The Challenges of Multilateralism

The overall aim of this article is to analyse the taxpayers’ rights in 
relation to the emerging standard of transparency with specific 
reference to Brazil, Colombia, South Africa and Uruguay. Exchange of 
information between tax authorities is increasing rapidly all around the
 world. This global development is largely the result of the 
introduction of the standard of transparency by the Organization for 
Economic Cooperation and Development (“OECD”) with the political mandate
 of the G20 and more recently, in 2013, the introduction of the global 
standard of automatic exchange of information. Governments have agreed 
that exchange of information is necessary to prevent tax evasion and to 
tackle tax avoidance including aggressive tax planning. All surveyed 
countries have accepted the standard of transparency including the 
standard of automatic exchange of information. Furthermore, it is 
evident that the development of such standards appears to have taken 
place in a coordinated manner, led mainly by international organizations
 comprising governmental officials.This article has first 
provided a comparative overview of the rules that Brazil, Colombia, 
South Africa and Uruguay have introduced to protect the taxpayers’ 
rights in the exchange of information process being the right to access 
to public information, the right to confidentiality, the right to 
privacy, and the procedural rights (right to be informed, the right to 
be notified and right to object and appeal). Thereafter, this article 
has assessed whether the rules introduced by the surveyed countries to 
protect these rights are consistent with the fundamental taxpayers’ 
rights that belong to the rule of law of these countries and with the 
principles of good governance and fiscal transparency.The main 
conclusion is that the countries have introduced to some extent similar 
rules to protect the right to confidentiality, right to privacy and the 
procedural rights in the exchange of information. However, some 
differences may be found in the detail level of protection of 
confidentiality in South Africa and in respect of the procedural rights 
in Uruguay. One of the drawbacks of these rules is that the rules 
introduced by the surveyed countries do not ensure that the protection 
of the right to confidentiality and the right to privacy is effectively 
guaranteed. The results of the analysis show that these rules do not 
protect the taxpayer in case of breach of confidentiality or misuse of 
the information exchanged.This article argues that the 
differences among rules and the lack of protection for taxpayer 
information may hinder the effective protection of the taxpayer and the 
tax administration should guarantee the protection of the taxpayer 
rights as part of the rule of law. Therefore, this article provides in 
Section 4 three recommendations addressing the right to confidentiality,
 the right to privacy and the taxpayers’ procedural rights. These 
recommendations may be extended (as best practices) to other developing 
countries on a similar economic and legal scale. However, further 
research will be needed to see whether the conclusions of this article 
are also applicable to (other) developing countries.

https://scholarlypublications.universiteitleiden.nl/access/item%3A2951908/view

The Rule of Law and the Effective Protection of Taxpayers' Rights in Developing Countries

This
article addresses data protection including the automatic processing of
personal and business data as a result of the flows of information and the
digital trade. Nowadays, data is
being collected, exchanged and used in small or large amounts by governments,
international organizations and companies for medical, educational, social,
industrial and tax purposes amongst others. The increasingly collection,
exchange and use of data by companies and governments, calls for attention to
the legal protection in the collection, exchange, use, monitoring and
processing of this data. Furthermore, the use of big data also raises questions
regarding the protection of privacy and also the safeguards in place for the
data controllers among others. The main question of this article is are the instruments in the era of digital
trade, internet governance and taxation sufficient to guarantee the privacy and
data protection of individuals and business? In order to answer this
question, this article will address the challenges and the instruments for the
protection of the use of data and big data in three areas: trade and internet
governance and taxation.

I.J. Mosquera Valderrama

Papers

Output Legitimacy Deficits and the Inclusive Framework of the OECD/G20 Base Erosion and Profit Shifting Initiative

BEPS principal purpose test and customary international law

Legitimacy and the Making of International Tax Law : The Challenges of Multilateralism

The Rule of Law and the Effective Protection of Taxpayers' Rights in Developing Countries

Processing personal and business data and the rule of law in the era of digital trade