Papers & Reports

The staff of the Joint Committee on Taxation describes legal and economic background relating to the taxation of income earned by multinational enterprises and the potential economic and revenue effects of Pillar One Amount A.

The authors examine the effect of business model digitalization on competition and corporate tax savings. Global policymakers have expressed concern that digitalization-related tax savings unfairly benefit the competitive standing of rival firms over their competitors. This article argues that rivals’ adoption of a digital business model leads to negative economic effects on the performance of their non-digitalizing competitors. Contrary to policymakers’ concerns of digitalization-related tax savings unfairly shaping competition, the authors' findings suggest that tax savings from digitalization are not a key driver of altering competition between digitalized and non-digitalized firms.

Elisa Casi, Petro Lisowsky, Barbara Stage, & Maximilian Todtenhaupt, Business model digitalization, competition, and tax savings (TRR 266 Acct. for Transparency Working Paper Series No. 142, 2024).

The United Nations General Assembly established an ad hoc intergovernmental committee to draft the general terms of a UN Framework Convention on international tax cooperation (2023 UN resolution). This triggered conflicting reactions.  One take is skepticism because control has been attributed to the OECD over the development of international tax standards for decades. Another take is optimism, especially from those who perceive the 2023 UN resolution as a turning point in the history of international tax policy. This optimism is fueled by the possibility of moving away from the OECD’s historical dominance of the international tax agenda, which has disregarded the genuine interests of developing nations. This article adopts a moderated stance. The 2023 UN resolution represents an extremely important recognition of the need for counterbalances in the dynamics of powers in international taxation. It also highlights flexibility as a policy strategy that may foster more inclusive international tax cooperation in the future.

Leopoldo Parada, International Cooperation on Tax Matters at the United Nations: A Turning Point in History, Caribbean Tax L.J. (forthcoming 2024).

This article explores the profound impact of the OECD's BEPS project on double taxation treaties.  It underscores the intricate interplay between the need to curb base erosion and profit shifting while maintaining a conducive environment for global economic activities.

The author purports that measures such as the Principal Purpose Test (PPT), the Limitation on Benefits (LOB), and the redefinition of permanent establishment, mark a significant stride towards aligning taxation with economic substance. These measures, though complex, are instrumental in mitigating the exploitation of tax treaties and ensuring that profits are taxed where actual economic activities and value creation occur.

The “LuxLeaks” scandal revealed numerous secret deals granted by the small country of Luxembourg to large multinational companies. These sweetheart deals occurred in the form of Luxembourg tax rulings, which allowed many name-brand companies to dodge huge amounts of tax that would otherwise be due to the U.S. or other countries. This article explores the origin and aftermath of Luxembourg’s informal tax ruling process and how it became so prolific. The author argues that the amenability of the tax administration, trust in the Luxembourg government, and secrecy were the foundations for attracting major multinational companies to these tax deals.

Leandra Lederman, The Untold Tale of a Tax Rulings Haven, 29 Stan. J.L. Bus. & Fin. (forthcoming 2024).

The call for more transparency in the tax world can hardly be overstated. One of the most prominent ways to achieve tax transparency is the exchange of information between countries. However, achieving a proper balance between the exchange of information, tax confidentiality, and privacy is quite a challenge. In this article, the authors investigate some of these challenges. More specifically, the authors elaborate on the issue of international and European data exchange obligations in light of the privacy provisions of the European Convention on Human Rights.

Esther Huiskers-Stoop, Breuer Almut, & Mark Nieuweboer, Exchange of Information, Tax Confidentiality, Privacy and Data Protection from an EU Perspective, 2 Erasmus L. Rev. 86 (2022).

This report presents an analysis of the main trends and developments in global and EU capital movements up to mid-2023, focusing on recent developments.

The OECD/G20 Inclusive Framework on BEPS released the report on Amount B of Pillar One, which provides a simplified and streamlined approach to the application of the arm's length principle to baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries.

The emergence of cryptocurrencies has dramatically transformed the financial landscape, ushering in a new era of digital assets. The lack of uniformity in the classification of cryptocurrencies—whether as property, currency, or something entirely distinct—has led to a patchwork of tax treatments across different jurisdictions. This classification bears significant implications for tax liabilities, which requires a nuanced understanding of local tax laws.  This article underscores the role of international organizations like the OECD and FATF in attempting to forge a consensus and harmonize tax rules across borders to mitigate issues of tax evasion and double taxation.

The purpose of this study is to provide feedback to the European Commission and the European Parliament on the proposed Council Directive on transfer pricing (the proposed Directive). The proposed Directive follows the impact assessment of this initiative, and it seeks to integrate key transfer pricing principles into EU law to put forward certain common approaches for Member States in the European Union. The comments of this study seek to provide constructive technical input, including alternative solutions. This might overcome the identified issues and, thus, support the EU institutions to improve the proposed text. The study has revealed that there are discrepancies between the EU Commission’s aim to align with the OECD Transfer Pricing Guidelines. These discrepancies might frustrate the goal of positive integration and cast doubt on whether the proposed Directive can promote legal and tax certainty while simplifying compliance.

Pasquale Pistone, João Félix Pinto Nogueira, Sergio Messina, Alessandro Turina & Ivan Lazarov, The Proposal for a Council Directive on Transfer Pricing: An Assessment, IBFD (2024).