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Full-Text Articles in Law
China And Beps, Reuven S. Avi-Yonah, Haiyan Xu
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 …
Back From The Dead: Reviving Transfer Pricing Enforcement, Reuven S. Avi-Yonah
Back From The Dead: Reviving Transfer Pricing Enforcement, Reuven S. Avi-Yonah
Articles
The OECD has recently come to recognize that the transfer pricing system does not work as intended. In its report on base erosion and profit shifting 2013 WTD 140-17: Other Administrative Documents, the OECD recognizes that BEPS results in revenue losses that affect all states, especially poorer ones; that systematic tax avoidance by the richest and most powerful companies in the world undermines the general legitimacy of taxation; that it gives MNEs significant competitive advantages over purely domestic firms, resulting in inefficient allocations of investment and major distortions to economic activity; and that it skews the decisions of the MNEs …
Between Formulary Apportionment And The Oecd Guidelines: A Proposal For Reconciliation, Reuven S. Avi-Yonah
Between Formulary Apportionment And The Oecd Guidelines: A Proposal For Reconciliation, Reuven S. Avi-Yonah
Articles
In the last 30 years, a debate has been raging in international tax circles between advocates of the OECD Transfer Pricing Guidelines and the arm’s length standard (ALS) they embody, on the one hand, and advocates of formulary apportionment (FA) on the other. After the adoption of the 1995 regulations and the new OECD Guidelines, the debate became quieter for a while, because everyone was waiting to see whether the issue had been resolved. However, while there have been few decided cases, it is clear by now that the transfer pricing problem is as bad as it ever was. That …
Cognitive Capture, Parliamentary Parentheses, And The Rise Of Fractional Apportionment, Stanley I. Langbein
Cognitive Capture, Parliamentary Parentheses, And The Rise Of Fractional Apportionment, Stanley I. Langbein
Articles
No abstract provided.
Xilinx And The Arm's-Length Standard, Reuven S. Avi-Yonah
Xilinx And The Arm's-Length Standard, Reuven S. Avi-Yonah
Articles
On May 7 the Ninth Circuit decided Xilinx v. Commissioner. By a 2-1 majority, the panel reversed the Tax Court and held that costs of employee stock options must be included in the pool of costs subject to a tax-sharing agreement. The Xilinx decision is important for three reasons. First, cost sharing is probably the key element in current transfer pricing law because it is the principal way in which profits from intangibles get shifted from the United States to low-tax jurisdictions. Moreover, informed observers agree that the allocation of income from intangibles is the most important problem in transfer …
Allocating Business Profits For Tax Purposes: A Proposal To Adopt A Formulary Profit Split, Reuven S. Avi-Yonah, Kimberly A. Clausing, Michael C. Durst
Allocating Business Profits For Tax Purposes: A Proposal To Adopt A Formulary Profit Split, Reuven S. Avi-Yonah, Kimberly A. Clausing, Michael C. Durst
Articles
The current system of taxing the income of multinational firms in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex; observers are nearly unanimous in lamenting the heavy compliance burdens and the impracticality of coherent enforcement. Further, despite a corporate tax rate one standard deviation above that of other OECD countries, the U.S. corporate tax system raises relatively little revenue, due in part to the shifting of …
Back To The Future? The Potential Revival Of Territoriality, Reuven S. Avi-Yonah
Back To The Future? The Potential Revival Of Territoriality, Reuven S. Avi-Yonah
Articles
Since 1994, the trend in the United States and other developed countries appears to be to reduce the scope of residence jurisdiction and increase the emphasis on source jurisdiction. If this trend continues, these countries are likely to move toward territoriality and decrease the emphasis on their CFC rules. In the author’s opinion, the reason for this trend is political and economic, not legal. It is part of tax competition, specifically the competition to be the headquarters jurisdiction for multinationals. The author also thinks, however, that it is not necessary to go down this road because the solution to the …
Tax Competition, Tax Arbitrage And The International Tax Regime, Reuven S. Avi-Yonah
Tax Competition, Tax Arbitrage And The International Tax Regime, Reuven S. Avi-Yonah
Articles
In the past ten years, I have argued repeatedly that a coherent international tax regime exists, embodied both in the tax treaty network and in domestic laws, and that it forms a significant part of international law (both treaty-based and customary). The practical implication is that countries are not free to adopt any international tax rules they please, but rather operate in the context of the regime, which changes in the same ways international law changes over time. Thus, unilateral action is possible, but is also restricted, and countries are generally reluctant to take unilateral actions that violate the basic …