Law Commons^™

Deeper Into The Knight: Exploring Deans Knight And Its Effects On The Canadian Gaar, Jinyan Li, Marshall Rothstein, Steve Suarez, Jeffrey Trossman

Articles & Book Chapters

This article discusses the most recent decision of the Supreme Court of Canada in Deans Knight Income Corporation v. Canada (2023) and explores its implications for the Canadian GAAR.

Interlinking Between Income Tax, Citizenship And Democracy? A Case Study Of Canada And China, Jinyan Li

Conference Papers

The interlink between taxation, citizenship and democracy appears to be obvious in Western democracies: citizens are voters, taxpayers and beneficiaries of public spending funded by tax revenues. The literature on the politics of taxation suggests that democratic institutions affect taxation at every stage of the policy-making process, the type of elections and governance model influence the level of redistribution and complexity of the tax system, democracies generally choose policies that are more favorable to the poor than non-democracies, the tax mix varies with the nature of the political regime, and more repressive governments rely less on personal income taxation. Political …

Introducing A Global Minimum Tax (Pillar Two) In Canada: Some Knowns And Unknowns, Jinyan Li

Articles & Book Chapters

This paper provides a high-level overview of Pillar Two Global Minimum Tax in terms of its policy objectives, technical design and implications for Canada. After teasing out some significant known and unknown challenges, it offers some thoughts on whether, and if so, how and when Canada can proceed with implementation.

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 …

The Pillar 2 Undertaxed Payments Rule Departs From International Consensus And Tax Treaties, Jinyan Li

Articles & Book Chapters

The OECD released pillar 2 model rules last December to provide a template for domestic legislation to implement the agreement reached on October 8, 2021, by almost 140 inclusive framework members on a two-pillar solution to address global ta challenges. The model rules are limited to the income inclusion rule (IIR) and undertaxed payments rule (UTPR) (collectively known as the global anti-base-erosion (GLOBE) regime) in the October agreement. However, and rather surprisingly, the meaning of the letter “P” in the UTPR was effectively changed from payments to profits in the model rules. There was little, if any, public discussion about …

The Global Tax Agreement: Some Truths And Legal Realities, Jinyan Li

All Papers

With much pomp and ceremony, it was announced that member jurisdictions of the G20/OECD BEPS Inclusive Framework “agreed to a two-pillar solution to address the tax challenges from the digitalization of the economy” (the “Two-Pillar Agreement”) This agreement has been hailed by some as “historic”, “momentous”, “revolutionary”, but criticized by others as “harmful to developing countries”, cartelistic power grabbing by a few powerful countries, or neocolonialism. So, is the agreement a cause for celebration or the opposite? What is the chance of the Agreement become real law? In this article, I try to first explain what the two-pillar agreement is …

Finding The Purpose Of Tax Treatyprovisions Under Gaar: Lessons From Alta Energy, Jinyan Li

Articles & Book Chapters

Establishing the object and purpose of tax treaty provisions lies at the heart of applying antiabuse rules, such as general antiavoidance rules under domestic law and the principal purpose test (PPT) in tax treaties. Tax planning arrangements like treaty shopping, designed to obtain treaty benefits, are not abusive unless they contravene the object and purpose of the provisions relied upon by the taxpayer.

Repurposing Pillar One Into An Incremental Global Tax For Sustainability: A Collective Response To A Global Crisis, Jinyan Li, Sophie Chatel

Articles & Book Chapters

This article proposes to repurpose the OECD/IF Pillar One Blueprint from a taxing rights reallocation mechanism into an incremental global tax for sustainability. With a common goal and DST-like feature for simplification, the proposal aims to ease the negotiation of essential and drastic simplifications required to deliver a workable solution.

Repurposing Pillar One Into An Incremental Global Tax For Sustainability: Some Blue Sky Thinking In The Midst Of Global Crisis, Jinyan Li, Sophie Chatel

Articles & Book Chapters

In this article, the authors make a case for repurposing the OECD Pillar One from a mechanism for reallocating taxing rights to a global tax on the largest and most profitable MNEs’ market-based profits. Such global tax would have the hybrid features of a net-basis corporate income tax and a turnover-basis digital services tax through a conversion formula that ensures a low-rate DST on sales can replicate a higher rate CIT on a country’s share of the profit determined using under the formulary allocation method. More importantly, the authors instill a common purpose of the international tax consensus – to …

Origin And Differentiation In International Income Allocation, Ivan Ozai

Articles & Book Chapters

The present international tax rules are typically justified by origin-based theories. These theories align countries’ tax entitlements with the geographical location of the economic factors that contribute to the creation of income. Two recent phenomena have rendered origin-based approaches limited in scope. First, the economic integration of multinational corporations and the relevance of intangibles have made it infeasible to precisely pinpoint the factors contributing to the generation of income. Second, the growing disputes between countries about which economic factors should be considered relevant for sharing the international tax base have recently led to increased consideration of distributional consequences, thus moving …

China’S Rising (And America’S Declining) Influence In Global Tax Governance?, Jinyan Li

Articles & Book Chapters

What are the implications of China’s rise for the US dominance in global tax governance? Will the signs of “decoupling” or parallel standards in other areas, such as technology (e.g., 5G) and COVID-19 vaccine appear in tax policy? Will China go along with the US-catalyzed global minimum tax in Pillar Two and US-modified reallocation of residual profits to market jurisdictions under Pillar One?

This article considers these questions in light of the broader historical and geopolitical context. 11 Section 2 provides an overview of the nature, purpose and legal instruments of international taxation and highlights the significance of the China …

International Tax Simplification In South Africa Through Managing Substantive Complexity And Improving Drafting Efficiency, Jinyan Li, Teresa Pidduck

Articles & Book Chapters

This chapter discusses the complexity of the South African international tax legislation in terms of both its substantive complexity and drafting complexity. Substantive complexity is established by examining the current legislation governing tax jurisdiction, the taxation of resident taxpayers and non-resident taxpayers as well as international tax incentive measures and anti-avoidance rules. Drafting complexity is established by comparing the South African Income Tax Act to the Canadian Income Tax Act in respect of the drafting of individual provisions and arrangement of provisions. The chapter recommends ways to simplify the South African international tax legislation by: (a) accepting substantive complexity that …

The Rule Of Law In International Tax Relations, Jinyan Li

All Papers

This paper discusses the issue of rule of law in international tax relations. International tax relations refer to the relationship between countries in terms of substantive tax laws and tax administration. It aims to contribute to the conversations about the Belt and Road Initiative (BRI) tax administration cooperation.

Implementation Of Arbitration Decisions In Domestic Law, J. Scott Wilkie

Articles & Book Chapters

Arbitration, even if it seems simply providing for the possibility of arbitration, is increasingly attracting attention as a possible means to discipline the resolution of otherwise potentially intractable international tax controversies concerning the allocation of taxing rights under tax treaties.While perceived, though not without reservation, to be a potential welcome addition to a typical mutual agreement procedure (MAP) patterned on article 25 (“the MAP article”) of the OECD Model Tax Convention on Income and Capital(“the OECD Model”) in the form of article 25(5), other provisions of article 25, notably its “interpretive” and “application,”and “legislative”,aspects and contemplated recourse to a “joint …

Taxation Of Non-Residents On Business Profits, Jinyan Li

Articles & Book Chapters

The taxation of non-residents on business profits is important to developing countries in terms of raising revenue and encouraging foreign investment and trade. The source country has the legitimate right to tax business profits arising in its jurisdiction. Tax treaties impose no limits on such taxing rights, other than the obligation to tax net profits (instead of gross profits) in some situations, once the threshold for taxation is satisfied. As such, this source of tax revenue belongs to the source country. There is generally little expectation of the residence country of a non-resident taxpayer in sharing the tax revenue. It …

Improving Inter-Nation Equity Through Territorial Taxation And Tax Sparing, Jinyan Li

All Papers

The current international tax system allocates the taxation of cross-border income by reference to the residence of the taxpayer and/or the source of income. The governing rules are contained in domestic tax laws and bilateral tax treaties. As noted by Professor Easson, the current regime of allocation is not based on any real agreement between nations and cannot be rationalized by any “obvious principle of fairness”. In fact, it is biased in favour of the capital exporting nations that devised the rules of the game. In order to improve fairness, Professor Easson considered it desirable to have some “redistribution” in …