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Law & Economics Working Papers

Tax Law

Tax treaties

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New Developments In Us Treaty Overrides, Reuven S. Avi-Yonah May 2022

New Developments In Us Treaty Overrides, Reuven S. Avi-Yonah

Law & Economics Working Papers

This note discusses the reservations added in the Senate Committee on Foreign Relations to the US-Chile tax treaty and their implications for the treaty override debate.


Tax Treaties, The Constitution, And The Noncompulsory Payment Rule, Reuven S. Avi-Yonah Mar 2021

Tax Treaties, The Constitution, And The Noncompulsory Payment Rule, Reuven S. Avi-Yonah

Law & Economics Working Papers

US Tax treaties have been regarded as self-executing since the first treaty (with France) was ratified in 1932. Rebecca Kysar has argued this raises a doubt on whether the treaties are constitutional, because tax treaties (like other treaties) are negotiated by the executive branch and ratified by the Senate with no involvement by the House, and all tax-raising measures must originate in the House under the Origination Clause (U.S. Const. Art I, section 7, clause 7). Her preferred solution is to make tax treaties non-self executing, but that would reverse the universal practice since 1932, and is therefore unlikely. Moreover, …


If Not Now, When? Us Tax Treaties With Latin America After Tcja, Reuven S. Avi-Yonah May 2019

If Not Now, When? Us Tax Treaties With Latin America After Tcja, Reuven S. Avi-Yonah

Law & Economics Working Papers

Since the 1990s, the US tax treaty network has expanded to include most large developing countries. However, there remains a glaring exception: The US only has two tax treaties in Latin America (Mexico and Venezuela), and one pending tax treaty (Chile). The traditional explanation for why the US has no treaty with, for example, Argentina or Brazil is the US refusal since 1957 to grant tax sparing credits to developing countries. Before the Tax Cuts and Jobs Act of 2017 (TCJA), this explanation was wrong, because the combination of deferral and cross-crediting meant that tax holidays in a source country …


Does Customary International Tax Law Exist?, Reuven S. Avi-Yonah May 2019

Does Customary International Tax Law Exist?, Reuven S. Avi-Yonah

Law & Economics Working Papers

Customary international law is law that “results from a general and consistent practice of states followed by them from a sense of legal obligation.” “International agreements create law for states parties thereto and may lead to the creation of customary international law when such agreements are intended for adherence by states generally and are in fact widely accepted.” Does customary international law (CIL) exist in tax? There are over 3,000 bilateral tax treaties, and they are about 80% identical to each other, but do they create CIL that binds in the absence of a binding treaty, like for example the …


Beat It: Tax Reform And Tax Treaties, Reuven S. Avi-Yonah Jan 2018

Beat It: Tax Reform And Tax Treaties, Reuven S. Avi-Yonah

Law & Economics Working Papers

The Tax Cuts and Jobs Act (TCJA) includes several provisions that may be viewed as potential violations of US tax treaties. However, most of those potential violations, such as new IRC section 951A and to a large extent new IRC section 59A, are covered by the Savings Clause (US model article 1(4)). The only remaining question is whether IRC section 59A (the “Base Erosion Anti-Abuse Tax”, or BEAT) violates the non-discrimination provision (article 24), which is exempted from the Savings Clause. The answer is no, because foreign related parties are not comparable to US related parties receiving interest or royalties.


Are Taxes Converging?, Reuven S. Avi-Yonah, Gianluca Mazzoni Oct 2017

Are Taxes Converging?, Reuven S. Avi-Yonah, Gianluca Mazzoni

Law & Economics Working Papers

Eduardo Baistrocchi’s outstanding new book on tax treaty disputes is the result of an intense five-year global collaborative project among international tax scholars, practitioners and administrators. The book provides an unprecedented set of information and offers the first global qualitative and quantitative analysis on one of the most important debates over international tax scholarship across the last decades, that is, whether an international tax regime exists and is binding upon states as a matter of customary international law.