Law Commons^™

Canadian Qdmtt Challenges, Jinyan Li, Angelo Nikolakakis, Jean-Pierre Vidal

Articles & Book Chapters

Nobody believes that Canada is a tax haven. The fact remains that the effective tax rate of certain entities could be less than 15%. If nothing is done, Pillar Two could therefore apply and taxes that naturally accrue to Canada could end up in foreign hands. We must therefore find a solution and the most obvious is that of adopting a qualified domestic minimum top up tax. Other solutions are possible, but they seem less attractive. A QDMTT still presents some challenges. These challenges include sharing with the provinces, determining the priority to be given to certain foreign taxes relating …

International Tax Reform: Who Gets A Seat At The Table?, Assaf Harpaz

Scholarly Works

The international tax framework relies on early-twentieth-century principles and favors the interests of the Global North, which created it. It bases taxing rights on a corporation’s physical presence and mostly allocates profits to the country of residence. Moreover, it has been slow to adapt to modern business practices. In the digital economy, companies shift profits with relative ease and often do not require a physical presence in the location of their consumers. International taxation needs reform, but leading proposals do not reflect meaningful input from the Global South and are unlikely to serve the needs of developing countries.

In 2021, …

Tax Harmony: The Promise And Pitfalls Of The Global Minimum Tax, Reuven Avi-Yonah, Young Ran (Christine) Kim

Michigan Journal of International Law

The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue.

In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework …

Tax Harmony: The Promise And Pitfalls Of The Global Minimum Tax, Reuven Avi-Yonah, Young Ran (Christine) Kim

Faculty Articles

The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue.

In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework …

A New Framework For Digital Taxation, Reuven S. Avi-Yonah, Young Ran (Christine) Kim, Karen Sam

Articles

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 …

Tax Incentives And Sub-Saharan Africa, Karen B. Brown

Pepperdine Law Review

The OECD’s Base Erosion Profit Shifting (BEPS) project has taken a powerful and welcome look at many of the tax avoidance strategies that proliferate in a world where multinational enterprises are in the business of exploiting gaps in the tax laws of different countries to minimize their ultimate tax bills. The focus on international consensus and prescriptions for reform has not been an unqualified good for the nations in Sub-Saharan Africa, which find themselves in the position of reacting to standards and taking on compliance burdens set without sufficient consideration of their special circumstances. Because the path for the BEPS …

Constructive Dialogue: Beps And The Tcja, Reuven S. Avi-Yonah

Law & Economics Working Papers

US international tax law is commonly conceived as developed in the US and influencing the development of other countries' international tax law. This paper will argue that in the case of the TCJA, the US legislation was heavily influenced by the OECD BEPS project, and that the continuing OECD work in Pillars I and II is likely to have a similar influence on the future development of US international tax law.

Uniform International Tax Collection And Distribution For Global Development, A Utopian Beps Alternative, Henry Ordower

All Faculty Scholarship

Under the guise of compelling multinational enterprises (MNEs) to pay their fair share of income taxes, the OECD and other multinational agencies have introduced proposals to prevent MNEs from eroding the income tax base of developed economies by continuing to shift income artificially to low or zero tax jurisdictions. Some of the proposals have garnered substantial multinational support, including recent support from the new U.S. presidential administration for a global minimum tax. This Article reviews many of those international proposals. The proposals tend to concentrate the incremental tax revenue from the prevention of base erosion into the treasuries of the …

Back To Basics: Rethinking Normative Principles In International Tax, Shay Moyal

SJD Dissertations

This dissertation is comprised of the following articles:

• Moyal, Shay Shimon, Back to Basics: Rethinking Normative Principles in International Tax (May 11, 2019). The Tax Lawyer, Volume 73, Issue: 1 (Fall 2019), Also available at SSRN: https://ssrn.com/abstract=3386678 or http://dx.doi.org/10.2139/ssrn.3386678
• Moyal, Shay Shimon, Don't Stop the BEAT (February 03, 2020). “Don’t Stop the BEAT,” Tax Notes Federal, Feb. 3, 2020, pp. 721-735 and Tax Notes International, Feb. 3, 2020, pp. 533-547., also available at SSRN: https://ssrn.com/abstract=3539601
• Moyal, Shay Shimon, Section 267a and the Taxation of Hybrid Mismatches Under the Code (September 10, 2020). The Tax Lawyer, Vol. 74, No. 2, also …

Taxing The Digital Economy Post-Beps…Seriously, Andres Báez Moreno, Yariv Brauner

UF Law Faculty Publications

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 these challenges presented by the digital economy. This article argues that such 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.

China And Beps, Reuven S. Avi-Yonah, Haiyan Xu

Articles

This article provides an overview of China’s reaction to the G20/OECD Base Erosion and Profit Shifting (BEPS) project. From 2013 to 2015, the OECD developed a series of actions designed to address BEPS activities by multinational enterprises, culminating in a final report of 15 action steps. The article reviews and explains China’s reaction to the BEPS project and its actions in detail, with a particular focus on transfer pricing issues. It shows that China has actively participated in both developing and implementing the BEPS project. The article further suggests that in the post-BEPS era, China is expected to implement the …

International Tax Avoidance -- Introduction, Reuven S. Avi-Yonah

Articles

Tax avoidance and evasion is a hot topic. On the evasion (illegal activity by individuals) front, the various leaks culminating in the Panama Papers have once again revealed the scope of evasion by the global elite. Gabriel Zucman conservatively estimated the annual revenue loss at $200 billion. On the tax avoidance (legal activity by corporations) front, the OECD BEPS project has estimated the scope of avoidance by multinationals at between $100 and $240 billion per year. By comparison, total US corporate tax revenues are about $400 billion per year. The articles in this volume reflect various aspects of these troubling …

Multinational Efforts To Limit Intellectual Property Income Shifting: The Oecd's Base Erosion And Profit Shifting (Beps) Project, Jeffrey A. Maine

Faculty Publications

Before 2017, there were two major international movements going on at the same time: (1) the Trans-Pacific Partnership (TPP) Agreement; and (2) the Organization for Economic Cooperation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) Project. The movements presented a unique opportunity to consider the intersection of a behemoth multinational trade agreement and ambitious multinational efforts to close international tax loopholes.

Although the TPP is essentially dead, as newly elected U.S. President Donald Trump unsigned the TPP as a matter of unilateral Executive power, the OECD’s BEPS Project is not. Indeed, many nations have been adopting BEPS Project proposals …

Location Savings And Segmented Factor Input Markets: In Search Of A Tax Treaty Solution, Mitchell A. Kane

Brooklyn Journal of International Law

This article analyzes the proper bounds of source-based taxation of profits generated when firms outsource factor inputs, such as labor, to achieve cost savings. The article advances arguments grounded in efficiency, treaty text, and international distribution to justify greater source-based taxation than has historically been the case. To implement such expanded taxation, the article proposes a modification to transfer-pricing rules in instances where factor inputs are acquired from affiliates and a modification to the tax treaty rules regarding permanent establishments where factor inputs are acquired from unrelated parties. Finally, the article deals with a range of complications, particularly relating to …

Bringing International Tax Policy Into The 21st Century, Michael J. Graetz

Faculty Scholarship

Michael J. Graetz delivered the following remarks at the Tax Policy Center's "A Corporate Tax for the 21st Century" conference on July 14 in Washington. These remarks are substantially taken from his April 2015 Ross Parsons Lecture at the University of Sydney Law School.

Treaties In The Aftermath Of Beps, Yariv Brauner

Brooklyn Journal of International Law

The article argues that, despite the fanfare around it, the outcome of the BEPS project is unlikely to be dramatic, at least in the short term. Beyond a period of increased legal uncertainty and aggressive enforcement by some countries, it expects little substantive change in tax treaties. The challenges to the dominance of the OECD and the richest countries would likely be assuaged with marginal concessions, most or all of which not be affecting tax treaties. Yet, the article sees a silver lining in the non-substantive, structural, and instrumental outcomes of the BEPS project. It argues that even if unintended, …

Tax Treaties As A Network Product, Tsilly Dagan

Brooklyn Journal of International Law

The copiousness of tax treaties is often presented as proof, not only of their success but also of their desirability. In focusing on alleviating double taxation by allocating tax revenues, however, the treaties project is a missed opportunity. This article explains that an international tax standard is a network product and uses network theory to explore the potential advantages and drawbacks of the tax treaty network in entrenching such a standard. Networks facilitate stability and self-enforcement. By joining (and remaining in) a network, users benefit from the compatibility with other users; this, in turn, incentivizes new users to join and …

“Thinking Outside The (Tax) Treaty” Revisited, Adam H. Rosenzweig

Brooklyn Journal of International Law

The rise and development of “Base Erosion and Profit Shifting” project by the Organization for Economic Cooperation and Development (BEPS) provides an ideal opportunity to revisit the fundamental principles underlying the international tax regime and the bilateral tax treaty regime in particular. This is true because BEPS represents both an attempt to create a new, truly multinational consensus on international tax matters and a clear move away from the bilateral tax treaty as the primary form of international coordination. From this perspective, BEPS provides the perfect opportunity to revisit the role of a proposed dispute resolution mechanism for nontreaty member …

The Two Faces Of The Single Tax Principle, Daniel Shaviro

Brooklyn Journal of International Law

Some argue that a “single tax principle,” said to underlie tax treaties, requires that cross-border income should generally be taxed once, rather than twice or not at all. Even if one accepts this principle, it is important to recognize the difference between “upside” departures, which occur when the same dollar of income is taxed more than once, and “downside” departures, which occur when it is not taxed at all. This article argues that a focus on barring upside departures from the single tax principle can be quite misguided. While over-taxing cross-border activity, relative to that occurring in one country, may …

Treaties In The Aftermath Of Beps, Yariv Brauner

UF Law Faculty Publications

The article argues that, despite the fanfare around it, the outcome of the BEPS project is unlikely to be dramatic, at least in the short term. Beyond a period of increased legal uncertainty and aggressive enforcement by some countries, it expects little substantive change in tax treaties. The challenges to the dominance of the OECD and the richest countries would likely be assuaged with marginal concessions, most or all of which not be affecting tax treaties. Yet, the article sees a silver lining in the non-substantive, structural, and instrumental outcomes of the BEPS project. It argues that even if unintended, …

Unilateral Responses To Tax Treaty Abuse: A Functional Approach, Omri Y. Marian

UF Law Faculty Publications

Recent years have seen a dramatic increase in the attention given to abusive tax schemes that take advantage of bilateral tax treaties. The ensuing discourse tends to view potential responses to treaty abuses as a hierarchical set of options, gradually escalating, in which treaty termination is a last resort option. This article argues that the hierarchical view of unilateral responses to treaty abuse is misguided. Unilateral responses to treaty-based abuse are not hierarchically ordered. Rather, the approach to treaty abuse is (and should be) functional, adopting specific types of unilateral responses based on the type of treaty abuse at issue. …

Transfer Pricing Challenges In The Cloud, Orly Mazur

Faculty Journal Articles and Book Chapters

Cloud computing - the provision of information technology resources in a virtual environment - has fundamentally changed how companies operate. Companies have quickly adapted by moving their businesses to the cloud, but international tax standards have failed to follow suit. As a result, taxpayers and tax administrations confront significant tax challenges in applying outdated tax principles to this new environment. One particular area that raises perplexing tax issues is the transfer pricing rules. The transfer pricing rules set forth the intercompany price a cloud service provider must charge an affiliate using its cloud services, which ultimately affects in which jurisdiction …

Destination-Based Cash-Flow Taxation: A Critical Appraisal, Wei Cui

Wei Cui

This Article offers the first comprehensive appraisal in both the legal and economic literatures of proposals for adopting destination-based cash flow taxation (DCFT) of multinational corporations. The DCFT was a key recommendation for reforming corporate taxation in the U.K., and has subsequently attracted wide attention as a way to fundamentally reform international taxation in the U.S., Europe and elsewhere. The core intuition of the DCFT is to tax profits earned by mobile capital by reference to immobile factors. I distinguish three versions of the DCFT for implementing this intuition: 1. formulary apportionment of business profits by reference to locations of …

What The Beps, Yariv Brauner

Yariv Brauner

Unprecedented attention to aggressive international tax planning has shaken the earth under the most powerful players in the world of international tax policy design. The media exposure of what Bloomberg's calls “The Great Corporate Tax Dodge,” combined with the ever-growing discontent of civil society with the magnitude of contribution of the largest multinational enterprises to the society within which they operate, has recently forced the politicians to take action. Leaders of the strongest world economies demanded a revision of the rules of the international tax regime that would generate more revenues for their challenged coffers and would restore public trust …

What The Beps, Yariv Brauner

UF Law Faculty Publications

Unprecedented attention to aggressive international tax planning has shaken the earth under the most powerful players in the world of international tax policy design. The media exposure of what Bloomberg's calls “The Great Corporate Tax Dodge,” combined with the ever-growing discontent of civil society with the magnitude of contribution of the largest multinational enterprises to the society within which they operate, has recently forced the politicians to take action. Leaders of the strongest world economies demanded a revision of the rules of the international tax regime that would generate more revenues for their challenged coffers and would restore public trust …