Fresh Ideas Emerge for New EU Budget Levies

Drawing on two decades of IRS SOI data, this paper examines how foreign ownership shapes the geographic and economic footprint of U.S. corporations, with implications for international tax policy and investment regulation.

This paper analyzes how potential tariff disputes with Canada and Mexico would affect U.S. states unevenly, highlighting regional exposure to international trade policy shocks.

This paper examines how governments respond to offshore data leaks by adopting reputation repair policies, shedding light on the interaction between tax enforcement, offshore secrecy, and international compliance incentives. We examine whether the public revelation of sensitive tax information prompts firms to adopt reputation repair policies targeting shareholders. The authors investigate whether firms implicated in the leaks improve their governance, increase investor remuneration, and reorganize their activities to restore shareholder trust relative to unaffected firms. They find that, after the leaks, firms appoint more directors, especially in operations, audit, and finance and accounting, pay higher dividends, and reduce their presence in tax havens, without increasing effective tax rates. They conclude that overall, data leaks appear to change the cost-benefit trade-off of tax strategies in ways that are, on net, favorable to shareholders.

This article analyzes the separate-entity principle as applied in the OECD Transfer Pricing Guidelines, exploring its theoretical foundations and practical consequences. It evaluates tensions between formal legal separateness and economic integration within multinational enterprises.

This article examines Australia’s tax treaty policy from the perspective of a capital-importing but high-income jurisdiction. It explores the tension between Australia’s interest in protecting its source-country tax base and the constraints imposed by prevailing OECD treaty norms. Through analysis of treaty practice and policy choices, the article highlights structural trade-offs faced by capital-importing countries in negotiating withholding taxes, permanent establishment thresholds, and allocation rules within the existing international tax framework.

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Citation: McDonald, Michael, Income Shifting from Transfer Pricing: Further Evidence from Tax Return Data, 94 Journal of Public Economics 555 (2010).
Earlier version available at SSRN: https://ssrn.com/abstract=6022454.

This article analyzes the OECD Pillar Two global minimum tax following its initial implementation phase, focusing on the structural mechanics of the regime and emerging signs of geopolitical fragmentation. The author examines how divergent domestic implementation choices, enforcement asymmetries, and coordination challenges affect the operation of the income inclusion rule and undertaxed profits rule. The article highlights risks to coherence and convergence as jurisdictions adapt Pillar Two to local political and fiscal priorities.

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This article examines how residence-country double tax relief methods and tax sparing provisions shape negotiated withholding tax outcomes in tax treaties between developing countries and OECD member states. Focusing on portfolio dividend withholding taxes, the analysis shows that treaties with credit-method residence countries tend to produce larger gaps between domestic withholding rates and treaty ceilings than treaties with exemption-method partners. The study further demonstrates that tax sparing provisions neutralize this effect, enabling developing countries to sustain higher negotiated withholding taxes. The findings contribute to debates on treaty design, distributive consequences of relief methods, and the role of tax sparing in preserving source-country taxing rights.

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The authors argue that the components of the U.S. minimum tax regime in the form of a tax on net CFC tested income, the CAMT and the BEAT, form a dense and overlapping tax structure that imposes significantly higher compliance burdens than EU Pillar Two regimes, undermining any characterization of the U.S. system as a permissive or lightly enforced alternative.