Taxation-Transnational Commons^™

Blockchain, Bitcoin, And Vat In The Gcc: The Missing Trader Example, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

Blockchain is coming to tax administration and will cause fundamental change. This article considers the potential for blockchain technology as it applies to the introduction of a value added tax in the Gulf Cooperation Council.

Blockchain technology disrupts centralized ledgers. Blockchain improves efficiency, security and transparency. Perhaps no centralized ledger system presents more challenges than that of the modern tax administration. The central data storage system of a modern tax authority contains all return, payment, and audit activity for all taxpayers arranged tax-by-tax for three years or longer periods of time.

It is likely that blockchain will come first to …

Trump & Vat: Nafta, Trade Barriers, And Retaliatory Tariffs, Richard Thompson Ainsworth

Faculty Scholarship

During the first presidential debate President-elect Donald J. Trump argued that the value added tax (VAT) operated as a trade barrier to American business everywhere. He particularly pointed to the North American Free Trade Agreement (NAFTA). Mexico was a special concern. China was also a concern, but in this instance Trump was troubled both by China’s VAT and by China’s alleged currency manipulation.

This paper can only consider the VAT aspect of Trump’s trade policy. There appears to be some confusion about the operation of the VAT, particularly the border adjustment mechanism, and how US tariffs could “level the playing …

The Global Fight Against Base Erosion And Profit Shifting Under The Oecd’S Country-By-Country Reporting Rules: A Possible Solution?, Oladiwura Ayeyemi Eyitayo-Oyesode

LLM Theses

The base erosion and profit shifting (BEPS) phenomenon continues to create detrimental consequences in states. BEPS is engendered by two fundamental factors, namely, unhealthy fiscal policies of tax havens and preferential tax regimes, and transfer mispricing by multinational corporations (MNCs). The OECD, through its BEPS Project notes that the lack of transparency in the global activities of MNCs is a major cause of BEPS. To close this gap, the OECD released the CBCR Rules. This thesis discusses the severity of the BEPS phenomenon and assesses the anti-BEPS efforts of the OECD. Upon an assessment of these efforts, this thesis argues …

Source, Character And Taxable Presence In A Digital World: International Taxation Of Online Advertising, Assaf Prussak

SJD Dissertations

The purpose of this dissertation is to examine the application of the U.S. and international tax rules and norms to income derived from online advertising, to consider the challenges and problems that arise when these rules are applied to such a purely-digital type of income, to propose an alternative framework for the taxation of online advertising, and to discuss the legislative measures adopted by various countries in an attempt to tax this type of income (and other income derived from digital-based activities).

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 …

Formulary Apportionment And International Tax Rules, Reuven S. Avi-Yonah, Zachee Pouga Tinhaga

Book Chapters

Any proposal to adopt unitary taxation (UT) of multinationals has to contend with whether such taxation is compatible with existing international tax rules, and, in particular, with the bilateral tax treaty network. Indeed, some researchers have argued that the separate accounting (SA) method and the arm’s length standard (ALS), introduced in the early twentieth century, are so embodied in the treaties that they form part of customary international law, and are binding even in the absence of a treaty. We disagree, because the unitary approach is just as widely embodied in most of the current international tax treaties, and, where …

Minimalism About Residence And Source, Wei Cui

Michigan Journal of International Law

In this Article, I relate the discomfort with fundamental principles in taxing individuals’ worldwide income to a problem that has attracted greater attention in recent years: the assignment of geographical sources to income. I suggest that there is substantial similarity between critiques of residence rules (of which critiques of citizenship-based taxation are examples) and critiques of source rules. However, I argue that problematic residence and source rules are only symptoms, not causes, of unsatisfactory conceptual paradigms in international taxation. Many scholars portray source and residence rules as inadequate means for achieving purportedly given normative objectives in the age of intense …

Defining Residence For Income Tax Purposes: Domicile As Gap-Filler, Citizenship As Proxy And Gap-Filler, Edward A. Zelinsky

Michigan Journal of International Law

In this paper, I place the United States’ adherence to citizenship-based taxation in the context of the states’ tax systems. Forty-one states impose general income taxes on the worldwide incomes of their respective residents. These state tax systems are important repositories of experience that confirm the administrative benefits of citizenship-based taxation. Domicile today plays an important role in state tax systems as a gap-filler when more objective statutory residence laws fail to assign any state of residence to the taxpayer. Citizenship is an administrable proxy for domicile and serves a similar gap-filling role in the taxation of individuals whose income …

Citizenship Overreach, Peter J. Spiro

Michigan Journal of International Law

This Article examines international law limitations on the ascription of citizenship and national self-definition. The United States is exceptionally generous in its extension of citizenship. Alone among the major developed states, it extends citizenship to almost all persons in its territory at the moment of birth. This birthright citizenship is constitutionally protected under the Fourteenth Amendment. At the same time that it is generous at the front end, U.S. citizenship is sticky at the back. Termination of citizenship on the individual’s part can involve substantial fees. Expatriation is contingent on tax compliance and, in some cases, will implicate the recognition …

A Global Perspective On Citizenship-Based Taxation, Allison Christians

Michigan Journal of International Law

This Article contends that, with regard to individuals who reside permanently outside of the United States, the global assistance sought under FATCA to enforce U.S. income taxation solely on the basis of citizenship violates international law. It argues that insisting upon foreign cooperation with the FATCA regime, under threat of serious economic penalties, is inconsistent with universally accepted norms regarding appropriate limits to the state’s jurisdiction to tax, while also being normatively unjustified. Accordingly, FATCA should be rejected by all other nation states to the extent it imposes any obligations with respect to individuals who permanently reside outside of, and …

A New Chapter In Natural Resource-Seeking Investment: Using Shared Decisions System Design ("Sdsd") To Strengthen Investor-State And Community Relationships, Mariana Hernandez Crespo Gonstead

Cardozo Journal of Conflict Resolution

The time is here. The Latin American region cannot wait any longer; there is simply too much at stake: too many lives, too much potential, and, ultimately, too much waste. The discourse must change from focusing on Investor-State Dispute Settlement ("ISDS") at the international level to addressing the structural and systemic issues at the local level. This shift will strengthen the investor-State relationship and lead not only to the retention, but also the expansion of the Foreign Direct Investment ("FDI").

Citizens Abroad And Social Cohesion At Home: Refocusing A Cross-Border Tax Policy Debate, Michael S. Kirsch

Journal Articles

Modern developments raise significant questions about the future importance (or non-importance) of formal citizenship status. For example, while many have interpreted the European Union project, with its emphasis on the free movement of individuals, as portending the decreasing relevance of nationality, recent developments, such as the “Brexit” vote, suggest that national identity remains an important factor for many individuals. While much of the public debate over citizenship focuses on areas, such as immigration, that are more obviously tied to formal citizenship status, this debate also impacts cross-border tax policy.

Over the past decade, several scholars have addressed the use of …

Putting The Substance Back Into The Economic Substance Doctrine, Nicholas Giordano

Brooklyn Journal of Corporate, Financial & Commercial Law

The foreign tax credit, which saves U.S. taxpayers from paying both foreign and domestic income taxes on the same income, is critical to facilitating global commerce. However, as savvy taxpayers discover increasingly complicated ways to abuse the foreign tax credit regime through the structuring of business transactions, courts have become increasingly skeptical of the validity of those transactions. Using the economic substance doctrine, a common law doctrine codified in 2010 at I.R.C. § 7701(o), courts will disallow tax benefits stemming from a transaction that is not profitable absent its tax benefits, and which the taxpayer had no incentive to undertake …

Minimalism About Residence And Source, Wei Cui

All Faculty Publications

Many economists and legal scholars claim that the traditional conceptual and policy framework for international taxation is defunct. The examples they offer most often to support such claims are failures of residence- or source-based taxation to achieve a variety of normative objectives. This article suggests that there is a very different way of seeing why international taxation has become intellectually controversial. The key problem is not that the globalization of economic activities makes the traditional policy tools outdated; instead, it is that scholars and policymakers have more frequent occasions to disagree about the normative goals of international taxation. Thus most …

Taxation Of Non-Residents' Capital Gains, Wei Cui

All Faculty Publications

Designing and enforcing a legal regime for taxing non-residents on capital gains realized from domestic sources is a topic of vital importance for developing countries. The reason is that non-capital-gain income that may be derived from a given country can generally be crystalized in the form of capital gains on the disposition of the income-generating asset. This is true of most important types of income, be it rent, interest, royalty, dividend or business profit. Taxing capital gains, therefore, is invariably needed to ensure that income from assets in the source country is properly subject to tax. In this sense, capital …

Canada: Limitation On The Elimination Of Double Taxation Under The Canada-Brazil Income Tax Treaty, David G. Duff

All Faculty Publications

This short comment reviews the Tax Court of Canada decision in Société générale valeurs mobilieres inc. v. The Queen, addressing the interpretation of the elimination of double taxation article in the Canada-Brazil Income Tax Treaty. The comment argues that the Court rightly rejected the taxpayer’s argument that treaty relief should extend to Canadian tax otherwise payable on gross interest income without taking into account any expenses incurred to earn this income, accepting the revenue department’s argument that treaty relief was limited to Canadian tax otherwise payable on net interest income earned in Brazil.

Defining Residence For Income Tax Purposes: Domicile As Gap-Filler, Citizenship As Proxy And Gap-Filler, Edward A. Zelinsky

Articles

The states' income tax systems are important repositories of experience which confirm the administrative benefits of citizenship-based taxation. Domicile today plays an important role in state tax systems as a gap-filler when more objective statutory residence laws fail to assign any state of residence to the taxpayer. Citizenship is an administrable proxy for domicile and serves a similar gap-filling role in the federal taxation of individuals whose income and activities straddle across national boundaries.

The states' difficulties enforcing domicile-based taxation highlight the administrative benefits of citizenship-based taxation. As long as residence is understood for tax purposes in terms of domicile, …

Two Cheers For The Foreign Tax Credit, Even In The Beps Era, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

Faculty Scholarship

Reform of the U.S. international income taxation system has been a hotly debated topic for many years. The principal competing alternatives are a territorial or exemption system and a worldwide system. For reasons summarized in this article, we favor worldwide taxation if it is real worldwide taxation – i.e., a non-deferred U.S. tax is imposed on all foreign income of U.S. residents at the time the income in earned. This approach is not acceptable, however, unless the resulting double taxation is alleviated. The longstanding U.S. approach for handling the international double taxation problem is a foreign tax credit limited to …

Beps And The New International Tax Order, Allison Christians

BYU Law Review

Nations across the world are currently engaged in a coordinated international effort, ostensibly to curb excessive tax avoidance by the world’s biggest multinational companies. This Article contends, however, that the most likely impact will be to entrench a monopoly held by a small number of rich countries over the policymaking processes that created the tax avoidance problem to begin with. To examine this contention and probe possible solutions to it, the Article considers the legal and institutional components of the coordination project, by situating them historically and analyzing their multi-functionality as both norm diffusion and institutional reinforcement mechanisms. The Article …

Defending Worldwide Taxation With A Shareholder-Based Definition Of Corporate Residence, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

BYU Law Review

This Article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The Article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows: 1. A foreign corporation is a U.S. tax resident for any year if fifty percent or more of its shares, determined by vote or value, was …