scholarly journals Global inequalities in taxing rights: An early evaluation of the OECD tax reform proposals

2019 ◽  
Author(s):  
Alex Cobham ◽  
Tommaso Faccio ◽  
Valpy FitzGerald
Keyword(s):  
Tax Reform ◽  
Oecd Countries ◽  
Corporate Taxation ◽  
Lower Income ◽  
Corporate Tax ◽  
Early Evaluation ◽  
Public Evaluation ◽  
Independent Commission ◽  
Lower Income Countries

The current OECD process to reform the international rules governing corporate tax, aimed to achieve a consensus solution by 2020, has finally recognised the need to introduce elements of formulary apportionment to allocate the profits of multinationals and is framed explicitly in terms of redistributing taxing rights between countries. In this paper we provide the first public evaluation of the redistribution of taxing rights associated with the leading proposals of the OECD, IMF and the Independent Commission for the Reform of International Corporate Taxation (ICRICT). The first key finding is that that reallocation of taxing rights towards “market jurisdictions”, as it is currently understood, is likely to be of little benefit to non-OECD countries. Indeed, the proposal is likely to reduce revenues for a range of lower-income countries. Second, all of the proposals deliver a much broader distribution of benefits if some element of taxing rights is apportioned according to the location of multinationals’ employment, and not only of sales.

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

2021 ◽  
pp. 3-27
Author(s):  
Cassandra Vet ◽  
Danny Cassimon ◽  
Anne Van de Vijver
Keyword(s):  
Developing Countries ◽  
Power Relations ◽  
Tax Reform ◽  
Transfer Pricing ◽  
Corporate Taxation ◽  
Lower Income ◽  
Split Method ◽  
Material Interests ◽  
Global Initiative ◽  
Lower Income Countries

AbstractIt 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.

Developing economies will struggle to rebound solidly

2021 ◽  
Keyword(s):  
Developing Economies ◽  
The United States ◽  
Lower Income ◽  
Corporate Tax ◽  
Content Type ◽  
Special Drawing ◽  
Special Drawing Rights ◽  
Lower Income Countries ◽  
Global Growth ◽  
Economic Outlook

Significance Although the Fund upgraded its forecast for global growth this year to 6%, the recovery is becoming more uneven. Decisions were taken on global corporate tax, extended debt relief for developing states and a large disbursement of Special Drawing Rights (SDRs). Whether these measures are wide or deep enough to support lower-income countries is debatable. Impacts Led by the United States, support for corporate tax reform is rising, but benefits will not come soon enough for fiscally distressed states. The firm global recovery relies on China’s GDP gaining more than 8% and India’s more than 10%; India faces greater immediate downside risks. The economic outlook is brighter for developing nations with robust public finances and limited tourism reliance where COVID-19 is in check. COVAX delivery timings may be optimistic, and the WTO is unlikely to waive intellectual property rights to production capability transfers.

scholarly journals International Corporate Tax Avoidance

2020 ◽  
pp. 81-128
Author(s):  
Alex Cobham ◽  
Petr Janský
Keyword(s):  
Tax Avoidance ◽  
Multinational Companies ◽  
Critical Survey ◽  
Lower Income ◽  
Corporate Tax ◽  
Profit Shifting ◽  
Methodological Innovation ◽  
Financial Flows ◽  
Illicit Financial Flows ◽  
Lower Income Countries

exy2Tax avoidance by multinational companies is the most widely recognised tax abuse, and also the most heavily researched aspect of illicit financial flows (IFF). This chapter provides a critical survey of the leading estimates, highlighting the range of methodological innovation and alternative data. While the global range of estimated revenue losses is wide (between around $200bn and $600bn a year), consistent findings include that it is only a handful of jurisdictions that benefit from profit shifting at the expense of all others; and that lower-income countries lose the highest share of current tax revenues. While there is no single, perfect estimate in the literature, it does point the way to a potential indicator for the UN target.

scholarly journals At the Table, Off the Menu? Assessing the Participation of Lower-Income Countries in Global Tax Negotiations

2020 ◽  
Author(s):  
Rasmus Corlin Christensen ◽  
Martin Hearson ◽  
Tovony Randriamanalina
Keyword(s):  
Developing Countries ◽  
Developing Country ◽  
Step Change ◽  
Formal Structure ◽  
Lower Income ◽  
Corporate Tax ◽  
Equal Footing ◽  
Lower Income Countries

Since 2013, the formal structure of global corporate tax policymaking at the OECD has changed. Decisions are no longer made by 37 OECD members, but by 137 countries from all regions and levels of development through the ‘Inclusive Framework’ (IF). Official documentation emphasises that all countries participate on an ‘equal footing’, but some participants and observers have emphasised that developing countries in particular face practical obstacles that lead to unequal participation in practice. In this paper, we assess these claims, drawing primarily on 48 interviews with negotiators, policymakers and stakeholders involved in global tax discussions. We find that the explosion in formal membership has not in itself led to the step-change in developing country influence that the raw numbers imply. This is because of a combination of structural obstacles that are not unique to the IF, and some challenging aspects of the OECD’s way of working. Yet, lower-income countries have made some modest achievements to date, and there are signs of incremental progress towards a more effective presence. We develop a typology of mechanisms through which successes have been achieved: association with the efforts of more powerful states, anticipation of lower-income countries’ needs by the OECD secretariat and others, collaboration to form more powerful coalitions, and the emergence of expert negotiators with individual authority.

scholarly journals Corporate Tax Reform in the USA

2019 ◽  
pp. 44-56
Author(s):  
O. V. Bogaevskaya
Keyword(s):  
United States ◽  
Tax Reform ◽  
The United States ◽  
Corporate Taxation ◽  
International Taxation ◽  
Corporate Tax ◽  
Tax Rate ◽  
The Us ◽  
Taxation System ◽  
The Impact

The article examines the prerequisites, content and effects of changes in the corporate taxation system adopted in the United States under the Tax Cuts and Jobs Act in December 2017. The critical flaws and limitations of the US corporate taxation system that existed until 2018 are analyzed in detail. A conceptual consensus on the need to reduce the corporate tax rate and solving the problem of profit shifting existed in the US expert community for some time before the election of President D. Trump, but the balance of power in Congress made the changes impossible. The key provisions of the new corporate tax system, which primarily include a reduction in the corporate tax rate, reforming companies’ international taxation and measures to stimulate investment in the United States, are outlined. The expected consequences and first results of the reform, the impact of the adopted changes on the activities of different types of companies and on the US economy are considered. It is shown that the reform will lead to increased activity of both American and foreign companies on the US territory, as well as, possibly, a decrease in corporate tax rates in other countries. It is concluded that, despite the considerable budget burden, the tax reform will contribute to economic growth in the United States, both in the short and long run.

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