2023

Geringer’s paper seeks to explore treaty anti-abuse provisions specifically from an equality perspective. The significance of differing concepts for the assessment of tax avoidance and tax abuse in different double tax conventions has not yet been specifically evaluated through the lens of equality, and no previous studies have particularly focused on the question as to whether, to what extent, and on the basis of which concepts or principles, equal treatment for similar and possibly abusive situations ought (not) be realized at the treaty, EU or national levels. Geringer’s paper aims to rectify this, and questions the impact of unequal tax treatment in treaty application as a product of variances in anti-abuse provisions. It is based on a comparative analysis, and demonstrates that these effects are likely to specifically materialize in smaller economies and developing countries.

According to Wilkie and Eden, there are three underlying reasons for the current lack of confidence in the international rules for taxing the global profits of multinational enterprises (MNEs), to wit: (1) tax rules are not universal or natural; (2) taxes must be practical, administrable, and collectible; and (3) tax policy is a domain where national sovereignty and multilateralism are both important and conflictual. The authors use Transfer Pricing as a case study because it affects how an MNEs global profits are allocated among countries. Wilkie and Eden then make proposals for an alternative to the arm’s length principle with inspiration from the distinction made by the International Centre for Settlement of Investment Disputes between investment and trade that underlies the four-factor Salini test: contribution, assets, risk, and duration. They argue that the Salini test provides useful insights into the conundrum of “source” and a way out of the current lack of confidence in the international tax system.

Mintz in this paper examines the intersection between the corporate income tax base and the proposed global corporate minimum tax. Mintz notes that the aim of the global minimum tax is to reduce the incentive for profit shifting by putting a floor on corporate tax rates so that they do not fall below 15 percent of adjusted accounting profits. However, the global minimum tax itself will introduce new capital market inefficiencies as a result of which foreign-owned capital will be subject to tax more heavily than domestic capital. He notes further that the minimum tax distorts capital allocation by favoring labor-intensive projects over capital-intensive projects. Mintz also argues that it distorts the accounting decisions of corporations when they seek to avoid paying the tax. Overall, it is not clear that the global minimum tax will work any better than other policies aimed at reducing corporate profit shifting.

This paper by Kofler and Schnitzer considers the operation of the initial phase relief under the OECD Two Pillar Model Rules in its application in Europe, regarding whether it violates EU fundamental freedoms. The Pillar Two OECD Model Rules provide for initial phase relief for a five-year period, which prevents the application of the Undertaxed Payments Rule in order to ensure that the development of cross-border activities by purely domestic enterprises that benefit from low taxes in their home jurisdiction is not discouraged. The EU’s Pillar Two Directive mirrors the OECD Model Rules in that respect, but – due to its application of the Income Inclusion Rule to domestic Constituent Entities, including the Ultimate Parent Entity – it takes a more indirect approach to the initial phase relief through a mandatory exclusion from the IIR in certain domestic settings.
According to the authors, the non-application of the IIR to domestic Constituent Entities in the initial phase of an MNE’s international activity and to large scale domestic groups triggers the question whether the EU fundamental freedoms are breached.

Avi-Yonah in this paper interrogates the basic question as to why International Tax is bilateral compared to other areas of international law. Avi-Yonah notes that international tax law has traditionally been built upon bilateral treaties and unilateral actions, and by contrast, International trade law has traditionally been built upon multilateral treaties, with international investment law, although bilateral, containing Most Favored Nation (MFN) clauses that render it effectively multilateral. Avi-yonah’s paper explores the reasons and asks whether they are still valid.

Eden considers the UN Resolution 77/244, adopted by the General Assembly on 30 December 2022 which reaffirms earlier commitments by the United Nations to improve international tax cooperation, fight illicit financial flows, and combat aggressive tax avoidance and evasion. The resolution requires the Secretary General to prepare a report on the ways to strengthen the inclusiveness and effectiveness of international tax cooperation with consultation with member states and other states actors (civil society inclusive). It is in furtherance of this that Eden offers comments on different ways to frame the issue of international tax cooperation. This opinion piece provides a brief history of international tax cooperation, it analyzes the three streams of research that may inform UN policymaking, to wit: the literatures on wicked problems, prescriptive public finance, and international regimes and global governance; and concludes with some suggestions for the way forward.

Cui in this paper considers the Canadian draft Digital Services Tax Act (DSTA) and the status of the Act in Canada. Cui notes that there has been a dismissal of the Canadian efforts towards taxation of the digital economy both within and outside Canada, and highlights three ways in which this dismissal of Canada’s proposed DST is worthy of consideration. Cui opines that the Canadian DST is much broader in scope than its U.K. and French counterparts, which in his view displaces criticism as to narrow scope which was leveled against the UK and French digital services taxes. Secondly, the author argues that the DSTA raises important new questions about DST design, especially in connection with taxing business-to-business and social media platforms, that may not be just technical in nature, but requires debate on the DST’s purpose. Finally, Cui notes that, since the enactment of the DST in 2019, the world has been plagued by other larger, and seemingly intractable, trade disputes. Yet the global tax profession continues to be fixated on the pettier trade dispute that DSTs have generated.

According to Barth, the Retained (EU) Law (Revocation and Reform) Bill (the Bill) sends an unambiguous message of Parliament placing greater reliance on the UK's domestic enactments and interpretations, while removing EU law from the UK’s statute books and case-law. In this paper, the author explores the impact and risks of such reliance on UK domestic law within the realm of VAT, which is an area of tax law that places heavy reliance on retained EU law.

In view of the looming adoption of domestic minimum tax regimes under the Global Anti-Base Erosion (GloBE) as a means of ensuring that multinational enterprises pay a minimum level of tax, Noked in this paper notes the absence of guidance on several important design and policy issues concerning domestic minimum tax and analyzes the relevant rules in the OECD Model Rules and the guidance in the Commentary. He also explores several questions that the OECD and the GloBE Implementation Framework should consider regarding the design of domestic minimum taxes and related issues such as collateral benefits.

The authors in this paper exploit the 2017 US tax reform to learn about the tax-competitiveness of US multinational corporations relative to their international peers. They compare pairs of similar US and European firms listed on the S&P500 or StoxxEurope600. Their results suggest significantly lower effective tax rates of US MNCs compared to their European competitors after the US tax reform. They provide evidence that US MNCs already successfully engaged in international tax planning prior to the reform, and this behavior is unchanged after the tax reform.

The authors in this paper provide a unique perspective to the debate around the digital economy, intangibles and taxation. They argue against the common perception of the digital economy being driven mostly by data, technology, the network effect or broadly speaking – intangibles.

They argue instead that “intangibles”, “technology”, or even “robots” should not simply be regarded as output of a genius or AI from the cloud but as output of labour, data, and resources. They posit that intangibles are overvalued, and auxiliary routine functions are undervalued. The potential reasons for this overvaluation include a lack of digital literacy even under experts, a biased valuation process, and tax evasion.

The authors opine that the potential negative impacts, such as inequalities and a monopoly driven innovation blockade, resulting from a potential overvaluation, emphasizes the need for further research, and submit that when the issues are looked at from their prism, the outcome for the nexus discussions in international tax law will be that even for AI you might need a physical presence in the form of labour, data, and resources.