Abstract

The book describes the difficulties of the current international corporate income tax system. It starts by describing its origins and how changes, such as the development of multinational enterprises and digitalization have created fundamental problems, not foreseen at its inception. These include tax competition—as governments try to attract tax bases through low tax rates or incentives, and profit shifting, as companies avoid tax by reporting profits in jurisdictions with lower tax rates. The book then discusses solutions, including both evolutionary changes to the current system and fundamental reform options. It covers both reform efforts already under way, for example under the Inclusive Framework at the OECD, and potential radical reform ideas developed by academics.

Index

A

  • Access charges, 214

  • Accounting standards, 255

  • Active financing exception, 114

  • Adjustment methods, 238–39

  • Advertising

    • sealed-bid auctions, 197n8

    • taxes on, 218

    • user data value and, 197–98

  • AdWords, 197n8

  • Affiliates

    • cash-box, 66

    • cost-sharing arrangements between, 42, 53

    • internal debt and, 73

    • risk allocation among, 64, 66, 68

  • Agency

    • dependent agents, 148

    • independent agents, 149

    • permanent establishment and, 148–49, 233

  • Aggregate risk, 59–60

  • Aiken Industries, Inc. case, 166

  • Alberta, Canada, independent corporate income taxes in, 294

  • Alienation

    • of shareholdings, 161, 234

    • of ships or aircraft, 160

  • Allocation by formula, 259–60

  • Alphabet, 39

  • Alternative tax systems, 80

  • Amazon, 44, 51, 200

  • Amazon laws, 206

  • Andean Community, 347

  • Anti-avoidance regulations, 51, 175, 236, 341

    • deductibility limits, 243–44

    • proliferation of, 355–56

    • residence-based taxation and, 114–20

    • strengthening, 254–57

    • thin capitalization rules, 241–43

  • Antifragmentation rules, 317

  • Anti-inversion rules, 7, 118

  • Anti-Tax Avoidance Directive (ATAD), 94, 117, 119, 242, 243, 244t, 254, 342

  • Antitrust regulation, 200

  • Apple, 39, 44

  • Apportionment formula, extractive industries, 298–99

  • Arbitrage, 343t

    • between gross and net taxation, 158

    • between labor and capital, 12

  • Arm’s length pricing, 236, 236n17

    • alternatives to mechanisms using, 246–47

    • prescriptive approaches, 240–41

    • verification challenges, 230

  • Arm’s length principle, 5, 23, 26, 29, 35, 59

    • applying, 67

    • commercially legitimate transactions test and, 64

    • digitalization and, 208, 210, 222

    • extractive industries and, 235n16

    • financial transactions and, 73

    • interest rates and, 73–74

    • intragroup loans and, 76

    • risk deconstruction and, 62–64

    • services and, 42

    • strengthening, 236–41

    • tax avoidance and, 236

    • violations of, 34, 39–40

  • Artificial structures, 236

  • Assistance-in-collection clauses, 143

  • ATAD. See Anti-Tax Avoidance Directive

  • Auditing

    • local capacity gaps and, 320

    • ownership-based taxation and, 261

    • transfer pricing, 239

  • Australia, 240, 246, 333n41, 345

  • Austria, 238

  • Austro-Hungarian Empire, 123

  • Average returns, risk and, 65, 69

B

  • Back-to-back financing, 315

  • Bank of Scotland case, 166

  • Base case fiscal regime, 336

  • Base erosion, 314n11, 318–19

  • Base Erosion and Profit Shifting (BEPS), 35, 44n14, 53, 80, 175, 305, 341

    • Action 1, 154

    • Action 2, 116

    • Action 3, 116, 117

    • Action 4, 79

    • Action 5, 53, 87, 89, 94, 96t, 97–100

    • Action 7, 205, 233

    • Action 13, 240n22

    • agency-permanent establishment concept and, 149

    • CFC rules and, 116–17, 254

    • cooperation for reform and, 351

    • country-by-country reporting and, 239

    • Forum on Harmful Tax Practices, 94, 96

    • hybrid entities and, 118–19

    • hybrid instruments and, 72n21

    • impacts of, 342, 343t–44t

    • independent agents and, 149

    • intellectual property and, 89

    • interest deduction rules, 79

    • legitimate and artificial transactions, 64

    • limiting risk assumption, 66–67

    • non-cooperative jurisdictions list and, 89

    • norms embedded in, 354

    • risk allocation and, 76

    • tax competition and, 87

    • tax coordination and, 94

    • tax transparency and, 98

    • tax treaties and, 130–33

    • transfer pricing documentation, 240n22

    • transfer pricing guidance, 61, 62

    • treaty abuse and, 146, 168–69

  • Base Erosion Anti-Abuse Tax (BEAT), 244, 345, 346, 353n5

  • Beneficial ownership, 256n5

    • registers of, 256

    • treaty shopping and, 165–66

  • Benefit principle, 14n1, 207–8

  • BEPS. See Base Erosion and Profit Shifting

  • Bilateral tax treaties, 8, 109

    • number of, 133–34, 133f, 134f

    • OECD and UN model influences on, 126

  • Border adjustments, 265, 266t, 268

  • Brazil, 110, 245

  • Brown Tax, 323n34

  • Bureau van Dijk, 237

  • Business decision-making, 68

  • Business income

    • OECD and UN model differences, 128

    • tax treaties and, 147–51

  • Business income tax, 11

    • comprehensive, 16–17

C

  • Cadbury Schweppes case, 118

  • Canada, 100, 144, 144n35, 166

    • departure taxes, 120

    • extractive industries, 297

    • financial sector, 297

    • formulary apportionment in, 210, 284, 294

  • Capital

    • destination-based allowances for, 273–74

    • expensing, 19

    • exporting, 139, 141–42

    • heterogeneous, 182–84

    • importing, 151

    • intangible, 43, 43f

    • mobile, profit shifting and, 176–82

    • rent tax and allowances for, 19–20

  • Capital-exporting countries, 110f

  • Capital gains, 160–63, 231

    • OECD and UN model differences, 128

    • Source-based taxation and, 234–35

  • Capital income, 21

    • defining, 11

    • taxing, 11–14

    • withholding tax rates on, 49

  • Carryforward, 272

  • Cash-box affiliates, 66

  • Cash-flow taxes, 17–20, 324

  • destination based, 266–73

  • CDIS. See Coordinated Direct Investment Survey

  • CFCs. See Controlled foreign corporations

  • Check-the-box rules, 115

  • China, 212

    • formulary apportionment in, 295

    • secret comparables and, 238

  • Code of Conduct for Business Taxation, 88, 249, 347

  • Commercially legitimate transactions, 64

  • Commercial rationality problem, 74

  • Commissionaire arrangements, 149n44, 233

  • Committee on Fiscal Affairs, OECD, 125

  • Common Consolidated Corporate Tax Base (CCCTB), 211, 284, 295, 297

    • extractive industries, 297

  • Comparability analysis, 67

  • Competition, 47–48

  • Comprehensive business income tax, 16–17

  • Conduit arrangements, 163, 164

  • Conduit companies, 49

  • Conduit structures, 164

    • beneficial ownership and, 165

  • Consolidated financial statements, 255

  • Consolidated tax base, 285–86

  • Construction sites, 148, 232

  • Contract manufacturing, 63

  • Contractors

    • job transformation to, 37n7

    • production sharing and, 337

    • rules regarding, 317

  • Contracts

    • intragroup, 68

    • permanent establishment and, 148, 233

    • production-sharing, 322n30, 325

    • production sharing, 337

    • risk allocation via, 64, 65

    • risk aversion and, 65

  • Controlled foreign corporations (CFCs), 7, 254–56, 263, 344t

    • development of, 114–15

    • improving rules for, 116–18

    • minimum tax differences from, 257–58

    • profit shifting and, 178

  • Cookie nexus law, 206–7

  • Coordinated Direct Investment Survey (CDIS), 83–84, 144

  • Copyrights, 219

  • Corporate equity

    • allowances for, 19–20

    • destination-based allowances for, 273–74

  • Corporate income tax, 4, 11, 13–15, 34, 101f, 266t, 336

    • DBCFT and resource rent tax compared to, 334t

    • debt ratio elasticity to, 71

    • destination-based, 28–30, 274–75

    • under formulary apportionments, 287

    • fundamentals of international, 5

    • international arrangements and, 88

    • paper profits reacting to, 91

    • problems in international, 5–7

    • reform options for international, 7–8

    • resource rent replacing, 325

    • routine profit and, 302f

    • sales-based residual profit and, 303f

    • spillovers from competition in, 91–92

    • standard, 15–16

    • trends in rates, 87, 88f

  • Corporate income tax/resource rent tax regime, 336–37

  • Corporate inversions, 113–14, 118

  • Corporate residence, 24–25, 26t

  • Corporate taxation, 290–91

  • “Corporate Taxation in the Global Economy” (IMF), 4

  • Cost-sharing arrangements

    • between affiliates, 42, 53

    • risk allocation and, 66

  • Country-by-country reporting, 239

  • COVID-19, 3, 35

  • Credit rating agencies, 193n5

  • Cross-border information sharing, 93

  • Cross-border payments, 233

  • Cross-border production chains, 27

    • preferential tax regimes and, 88

  • Cross-border profit shifting

    • countering, 71

    • intragroup services and, 154

    • relocation of intangibles for, 97

  • Cross-border royalties, 43

  • Cross-border services, 157

  • Cross-border spillovers, 91–92

  • Cross-border supply chains, 265

  • Cross-border trade

    • Source-based taxation and, 229

    • withholding taxes and, 151

  • Cross-border withholding tax rates, 49

  • Customer information, 47

  • Cyclicality, 311

D

  • Data analytics firms, 193n5

  • Data breaches, 192

  • Data brokerages, 193, 197

  • Data collection

    • recognizing economic activity of, 204

    • separate accounting and, 209–10

  • Data collection and processing capabilities, 194

  • Datacoup, 197

  • Data mining, 193, 193n5

  • Data privacy rights, 194

  • Data valuation, 216

  • Data warehousing, 204

  • DBACC. See Destination-based version allowance for corporate capital

  • DBACE. See Destination-based allowance for corporate equity

  • DBCFT. See Destination-based cash-flow tax

  • Debt

    • booking in low-tax jurisdictions, 73

    • equity disguised as, 71–72

    • profit shifting with, 60

  • Debt bias, 16, 70, 77

    • income tax and, 71

  • Debt financing, 70t

    • globalization and, 73

    • profit shifting and, 70–81

    • tax revenue impact of, 80–81

    • transfer pricing and, 73–77

  • Debt leverage, 317

    • vulnerability of different options, 336–38

  • Debt ratio, 71, 241–43

    • thin cap rules and, 78

  • Decision-making, 68

  • Decolonization, 214

  • Deductible expenses, 285

  • Deductions

    • for business expenses, 11

    • depreciation and interest, 16

  • Deep Offshore Act (2019), 314n12

  • Deferral, 343t

    • tax avoidance through, 110–12

  • Deferred earnings, 112

  • De jure reciprocity, 135–36

  • Demographic trends, 212

  • Denmark, 256n5

  • Departure taxes, 119–20

  • Dependent agents, 148, 233

  • Depreciation, 272

  • Depreciation allowances, 285

  • Destination-based allowance for corporate equity (DBACE), 273–74, 277

  • Destination-based apportionment schemes, 300–301

  • Destination-based cash-flow tax

  • (DBCFT), 266, 266t, 277, 333–34, 334t, 346, 349, 357

    • corporate income tax and resource rent tax compared to, 334t

    • design of, 267

    • double tax agreement renegotiation and, 350

    • economic implications of, 268–69

    • international revenue and incidence implications, 278–81

    • location of sales and production impacts, 278–79

    • natural resources sector and, 272

    • ownership impacts, 279

    • revenue impact of, 269, 270f, 271f, 272

    • R+F and S-base, 272

    • untaxed assets and, 279–80

    • VAT similarities and differences, 275–76

  • Destination-based corporate income taxes, 274–75

  • Destination-based taxation, 7, 8, 18, 23, 89, 265, 267f

    • of corporate income, 28–30

    • user data and, 201

  • Destination-based version allowance for corporate capital (DBACC), 274, 277

  • Developing countries

    • extractive industries revenue, 312–13

    • formulary apportionment and, 290, 304, 334–35

    • tax incentives in, 103

    • tax treaties and, 133–39, 169–70

    • treaty shopping and, 164

    • withholding taxes and, 152, 153

  • Digital advertising, 45

  • Digital barter, 192, 194, 203

  • Digital companies, 45, 46f

  • Digitalization, 189–90, 222–24, 250, 260, 345

    • data value and, 195

    • empirical observations about, 45–47

    • formulary apportionment and, 210–13

    • incentives of, 200

    • income sources and, 231–32

    • investment-or asset-based approaches, 207–9

    • network effects and, 198–99

    • permanent establishment and, 204–9

    • profit allocation and, 209–13

    • service permanent establishment and, 158

    • tax challenges and, 7

    • user data and, 191, 195

  • Digital permanent establishment, 233

  • Digital service taxes, 3, 220–21, 232

  • Digital trade, growth of, 45–47, 46f

  • Direct conduits, 165

  • Dispute resolution

    • BEPS and, 130

    • double taxation and, 139, 348

  • Distribution mechanism, 286–87

  • Diverted profits taxes, 246, 345

  • Dividends, 49

    • withholding taxes and, 152

  • Dodd-Frank Act, 298, 298n11

  • Double Irish, 113

  • Double taxation, 8, 123, 343t, 344t

    • DBCFT and, 349, 350

    • dispute resolution and, 139

    • economic, 139

    • forms of, 139–40

    • juridical, 140

    • League of Nations and, 124

    • Mongolia canceled treaty on, 318

    • residence-based taxation and, 107

    • structured approach to treaties, 246

    • tax avoidance strategies exploiting, 236

    • taxing rights and avoiding, 6, 49

  • Draft Double Taxation Convention, 125

  • Dual citizenship, 262

  • Dual income tax, 12

  • Dual residencies, 119, 142

  • Dutch East India Company, 36n6

E

  • Earnings before interest, taxes,

    • depreciation, and amortization (EBITDA), 78–79, 241

  • Earnings before interest and taxes (EBIT), 241–42

  • Earning stripping rules, 78–79, 116n13, 241

  • East India Company, 33, 36n6

  • EBIT. See Earnings before interest and taxes

  • EBITDA. See Earnings before interest, taxes, depreciation, and amortization

  • E-commerce, 45

  • Economic and Monetary Community of Central Africa, 347

  • Economic double taxation, 139

  • Economic profiles, user data value and, 196

  • Economic rents

    • capital income and, 12–13

    • extractive industries and, 194, 298, 310–11

    • foreign capital owners and, 15

    • monopoly rent taxes and, 47

    • nonrenewable resource extraction and, 194

    • R and R+F cash-flow taxes and, 18, 273

  • Effective tax rates

    • average, 101f

    • of multinational enterprises, 39

  • Emden Company, 36n6

  • Emerging economy tax treaties, withholding tax rates, 339t

  • Employment

    • digitalization and, 45–47

    • formulary apportionment and, 284, 290, 291f

    • by multinational enterprises, 37–38, 38f

    • profit shifting costs and, 185

    • self-employed entrepreneurs, 12

  • Enron, 255

  • Entrepreneurial income, 12

  • Equalization levy, 244

  • Equity

    • allowances for, 19–20

    • DBACE, 273–74, 277

    • destination-based allowances for, 273–74

    • disguising as debt, 71–72

    • inter-nation goals, 290

    • private, 72

  • EU. See European Union

  • EU Accounting and Transparency

  • Directive, 298, 298n12

  • European Commission, 347

    • digital economy taxation expert group, 221

    • Google and, 200

  • European Court of Justice, 78

  • European Economic Area, 119

    • CFC rules in, 115

  • European Union (EU)

    • Anti-Tax Avoidance Directive, 94, 117, 119, 242, 243, 244t, 254, 342

    • beneficial ownership registers i, 256

    • CFC rules in, 115–17, 254

    • Code of Conduct for Business Taxation, 88, 98, 249, 347, 351

    • Common Consolidated Corporate Tax Base, 211

    • exit taxes, 119

    • formulary apportionment in, 284, 295–96

    • non-cooperative jurisdictions list, 89, 99, 351

    • tax coordination and, 94

    • tax directives, 8

    • tax reform and, 347

  • Exchange-of-information clauses, 143

  • Exchange rates, 29

  • Exit taxes, 7, 119–20, 344t

  • Expected returns, risk and, 63

  • Expensing, of capital, 19

  • Exploration, 310

  • Exporting capital, 139

  • Exports, 204–5

  • Extractive industries, 210

    • activities defined, 298

    • apportionment formula, 298–99

    • arm’s length standard and, 235n16

    • challenges, 313–14

    • design and implementation issues for tax reform, 323–26

    • developing countries revenue from, 312–13

    • fiscal regimes for, 311–12

    • formulary apportionment, 297–99

    • income subject to taxation, 298

    • new fiscal regime for resource-rich countries, 321–22

    • resource rent tax for, 324–25

    • safeguards to reduce risk of undervalue, 316–17

    • structural characteristics, 310–11

    • taxation in, 213–15

    • tax implications and characteristics of, 310–13

    • tax reform proposal for, 320–31

    • valuation methods in, 216

F

  • Facebook, 46f, 51, 197, 197«8

  • Factor distortions, 287–88

  • FARI. See Fiscal Analysis of Resource Industries

  • Federal equalization program, in Canada, 294

  • Financial Action Task Force, 98

  • Financial innovation, 71–72

  • Financial Secrecy Index, 256n5

  • Financial sector, formulary apportionment in, 296–97

  • Financial transactions

    • arm’s length principle and, 73

    • profit shifting with, 74

    • recharacterizing, 75

  • First mover advantages, 189

  • Fiscal Analysis of Resource Industries (FARI), 336

  • Fiscal Committee of League of Nations, 124–25

  • Fiscal Committee of Organisation for

  • European Economic Cooperation, 125

  • Fiscal regimes

    • country level reform, 332–33

    • for extractive industries, 311–12

    • profit shifting in, 326

    • profit shifting risks alternatives, 337, 338f, 338t

    • vulnerability to tax competition, 332

  • Fixed margins, 240

  • Flow-based data valuation, 216

  • Force-of-attraction, 150, 232

  • Foreign direct investment, 38–39

    • CDIS data, 83

    • funding, 82

    • low-tax jurisdictions role in, 44–45

    • Sources of, 70t

    • tax revenue impact of debt financing of, 80–81

    • tax treaties and, 136, 139, 142

  • Foreign-earned income

    • CFCs and, 254

    • GILTI and, 258

    • information exchange on, 262

    • subsidiaries and, 140

    • taxation of, 28

  • Foreign investment, 37

  • Foreign profits, 109–10

    • territorial systems for taxes on, 111

  • Foreign tax credits, 29

  • Formulary apportionment, 223, 266t, 346, 348

    • in Canada, 294

    • in China, 295

    • consolidated tax base, 285–86

    • digitalization and, 210–13

    • direct revenue implications, 289–90

    • distribution mechanism, 286–87

    • efficiency implications, 287–89

    • elasticity and, 291

    • in European Union, 284, 295–96

    • extractive industries, 297–99

    • factor distortions, 287–88

    • financial sector, 296–97

    • indirect revenue implications, 290–92

    • international tax reforms, 334–35

    • residence-based taxation and, 259–60

    • residual profit allocation, 299–304

    • revenue implications, 289–92, 291f

    • sector-specific formulae, 296–99

    • subnational and surpranational experiences, 292–99

    • tax avoidance and, 288–89

    • tax competition, 290–91

    • theoretical and practical design considerations, 285–92

    • in United States, 292–93

    • user-based royalties and, 220

  • Forum on Harmful Tax Practices, 93, 94, 96–99, 103, 249

  • Freelancers, 37n7

G

  • G20, 3, 35, 44n14, 53, 80

    • tax cooperation and, 352

  • GAAR. See General anti-avoidance rule

  • General anti-avoidance rule (GAAR), 344t

  • Ghana, 241

  • Gig economy, 37n7

  • GILTI. See Global Intangible Low Taxed Income

  • Global corporate tax system, weaknesses of, 304

  • Global enterprises, 35

  • Global financial crisis, 3

  • Global firms, 33, 35–37

    • international tax arrangements and, 48–49

    • organizational structure of, 51, 51f

    • source-residence principle and, 51–53

  • Global formulary apportionment, 290

  • Global Forum on Transparency and Exchange of Information for Tax Purposes, 89, 98, 261, 262

  • Global gearing ratio, 77

  • Global income tax, 12

  • Global Intangible Low Taxed Income (GILTI), 248, 258–59, 345, 346

  • Globalization, 27, 37

    • debt financing and, 73

  • Global market, 37

  • Global residual profits, 301–2

  • Global supply activities, 37

  • Global trade, 41

    • digital, 45–47, 46f

    • low-tax jurisdictions role in, 44–45

    • in services, 44–45

  • Global Witness, 256, 256n5

  • Google, 46f, 47, 51, 197n8, 200, 207

  • Graetz, Michael, 25

  • Graham Bell, Alexander, 33

  • Greenfeld investments, 39

  • Gross-net taxation arbitrage, 158

H

  • Habitual abode, 132

  • Harmful tax practices

    • criteria for identifying, 96t

    • international initiatives on, 94–99

  • Heterogeneous capital, profit shifting with, 182–84

  • Holding companies, 52

  • Homeland Investment Act of 2004, 112

  • Horizontal firms, 38

  • Hostile takeovers, debt as defense against, 72

  • Hybrid entities, 118–19

  • Hybrid fiscal regimes, 311

  • Hybrid mismatches, 344t

  • Hybrid security instruments, 72, 72n21

  • Hydrocarbon assets, 311

I

  • IMF

    • Coordinated Direct Investment Survey, 83–84, 144

    • Fiscal Analysis of Resource Industries, 336

    • international tax issues role of, 4

  • Implicit support, 76

  • Imputing data value, 197–98

  • Inbound investment, 346, 353

  • Inclusive Framework (OECD), 3, 233, 248, 258, 341, 351

  • Income

    • digitalization and sources of, 231–32

    • foreign-earned, 28, 140, 254, 258, 262

    • shiftable taxable, 27

    • sources of, 26–27, 231–32

    • stateless, 113

    • types of, for source-based taxation, 231

  • Income-inclusion rules, 249

  • Income shifting, 73

  • Income tax, 276, 276f

    • debt bias and, 71

    • reallocation of tax base among countries, 290

  • Income Tax Act of 2016 (India), 257

  • India, 146

    • equalization levy, 244

    • formulary apportionment in, 211

    • Income Tax Act of 2016, 257

    • permanent establishment and, 206

    • residence definitions and, 257

  • Indirect transfer of assets, 49

  • Industrial Revolution, 33

  • Inefficiently low tax rates, 90–91

  • Information and communications technology, 189

  • Innovation

    • financial, 71–72

    • intellectual property box and, 89

    • tax incentives and, 44

  • Instagram, 197, 207

  • Insurance companies, formulary apportionment for, 294n7

  • Intangible capital, 43, 43f

  • Intangibles, 189

    • allocation by formula and, 259

    • arm’s length principle and, 210, 222

    • intragroup transactions of, 53

    • marketing, 208

    • minimum taxes and, 258

    • residence-based taxation and, 248

    • royalties and, 219

    • transfer price and, 59

  • Integration system, 14

  • Intellectual property, 189

    • allocation by formula and, 259

    • arm’s length principle and, 210

    • risks and, 66

    • royalties and, 219

    • taxation and, 44

  • Intellectual property assets, 43

  • Intellectual property box, 89, 97, 101f

    • shortcomings of, 102–3

    • See also Patent box regimes

  • Interest, 49

    • controlling excess payments of, 71

    • DBCFT and, 268

    • restricting deductibility of, 77–79

    • withholding taxes and, 152

  • Interest limitation rule, 317, 344t

  • Interest rates

    • arm’s length principle and, 73–74

    • internal debt and, 73

    • intragroup loans and, 76

  • Internal debt, 241

    • affiliates and, 73

  • Internal debt funding, 60

  • Internal lending, 60

  • Internal transactions, 5

    • arm’s length pricing and, 230

    • mispricing for profit shifting, 236

  • international business income taxation, 11

  • International business rents earned, 15

  • International companies, 36

    • international tax arrangements and, 48–49

  • International minimum taxes, 257

  • International tax arrangements, international companies compared with global firms in, 48–49

  • International taxation, hybrid instruments and, 72n21

  • International tax challenges, 332

    • profit shifting, 314

  • International tax law

    • cooperation to implement global reform, 351–52

    • current state of framework, 342

    • future reform options and directions, 346–51

    • low-income country impact of reforms in, 352–55

    • shortcomings in current system, 342, 345–46

  • International tax planning, 39

  • International tax reforms

    • DBCFT, 333–34, 334t

    • formulary apportionment, 334–35

    • minimum tax, 333

    • residual profit allocation, 335–36

    • for resource-rich developing countries, 333–36

    • vulnerability of debt leverage options, 336–38

  • International trade, 33–34

    • empirical observations about, 40–45

    • proportion of firms engaged in, 40–41

    • in services, 41–42, 41f, 42f

  • International Trade Commission, 45

  • Inter-nation equity goals, 290

  • Intra-company royalties, 215

  • Intrafirm trade, 41

  • Intragroup contracts, 68

  • Intragroup loans, 73

    • arm’s length principle and, 76

    • foreign direct investment through, 81

    • interest rates of, 73

  • Intragroup operations, 26

  • Intragroup payments, 151

  • Intragroup prices, tax-minimizing by manipulating, 34

  • Intragroup services, 158

  • Intragroup transactions, 53, 245

    • risk allocation and, 64

  • Inversion, 113–14, 118

  • Investment

    • DBCFT and, 272

    • profit shifting impacts on, 176, 179, 184–85

    • tax differences and, 184–85

    • tax treaties promoting, 140–41

  • Investment flows

    • tax treaties and, 136, 139

    • treaty shopping and, 146

  • Investment income

    • OECD and UN model differences, 128

    • passive, 160

  • Investments, comprehensive business tax discouraging, 17

  • Investment tax credits, 44

  • Ireland, 100, 113

J

  • Japan, participation exemption system, 111

  • Joint Committee on Taxation, US, 72

  • Juridical double taxation, 140

K

  • Kane, Mitchell, 27

  • Kenya, 241

  • Key life events, user data value and, 196

  • Kleinbard, Ed, 113

L

  • League of Nations, 3, 49, 51

    • double taxation report, 124

    • Fiscal Committee of, 124–25

    • Model Tax Convention of, 109

  • Legal incorporation, 28

  • Leveraged buyouts, tax impact of, 72

  • License fees, DBCFT and, 272

  • Limitation-on-benefits provision, 166–67

  • Limited force-of-attraction rule, 150

  • Limited liability, 14n1

  • Limited-risk distributors, 204

  • LinkedIn, 197

  • Location-specific assets, 246

  • Location-specific rents, 13, 310, 346, 354

    • monopoly power and, 47

    • user data and, 194

  • Location-specific rent tax (LSRT), 355

  • Lockout effect, 111

  • Look-through rules, 114

  • Low-income economies

    • extractive revenue from, 312

    • international tax reform impact on, 352–55

  • Low-tax jurisdictions

    • booking loans in, 73

    • foreign direct investment and, 44–45

    • services trade and, 44–45

    • welfare effects of shutting down, 92–94

  • LSRT. See Location-specific rent tax

  • Luxembourg, 96

  • Lux Leaks, 35

M

  • Market countries, 293

  • Marketing intangibles, 208

  • Market prices, 59

  • Massachusetts, three-factor formula, 293

  • Mauritius, 135–36, 146

  • Meeco, 197

  • Microsoft, 197, 200

  • Microtransactions, 203

  • Middle-income economies, 139

    • extractive revenue from, 312

  • Mineral assets, 311

  • Minimum tax, 89, 251, 257–59, 333, 346

    • inbound, 353

    • outbound, 352

    • residence-based, 348

  • Mining fiscal regimes, 311, 313f, 329, 330t–31t, 336n46

    • royalty on, 321

    • withholding tax rates in emerging economy tax treaties, 339t

  • Mining operations, 161

  • MLI. See Multilateral instrument

  • Mobile applications, 192

  • Model Tax Convention, 109

  • Model tax treaties, 325n38

  • Mongolia, 144, 144n35

    • canceled double tax treaties, 318

    • taxing rights, 318

  • Monopoly power

    • multinational enterprises and, 47–48

    • natural, 194, 200

    • royal charters granting, 33

  • Mozambique, 135–36, 146

  • Multilateral Convention on Mutual

    • Administrative Assistance in Tax

    • Matters, 143

  • Multilateral instrument (MLI), 130, 131t–32t, 132, 205

  • Multinational Anti-Avoidance Law (Australia), 345

  • Multinational corporations, 5, 6

    • national identity of, 108

    • profit shifting by, 175

    • residence, 25

  • Multinational enterprises, 33, 35, 51

    • business risk of investment in, 82

    • CFCs and, 114–15

    • commercially legitimate transactions test, 64

    • commercial rationality problem and, 74

    • country-by-country reporting and, 239

    • digitalization and, 231–32

    • employment by, 37–38, 38f

    • evolution of, 36–37

    • global consolidated gearing ratio, 77

    • intangible capital and, 43

    • intellectual property and, 43

    • internal debt and, 60

    • intragroup transactions, 245

    • monopoly power and, 47–48

    • physical presence avoidance, 246

    • profit allocation and, 64

    • profit shifting and, 315

    • related-party debt financing of, 315

    • research and development expenditures, 43–44

    • residence manipulation by, 113

    • risk allocation and, 62, 64, 66

    • source-based taxation and, 229–30, 236

    • taxation and, 38–40, 48–53

    • tax avoidance techniques, 236

    • tax treaties exploitation by, 236

    • value added by, 37–38, 38f

    • withholding taxes and, 151

  • Multinational subsidiaries, 39

  • Mutual agreement procedure, OECD and UN model differences, 128

N

  • Nash equilibrium, tax competition and, 90

  • Natural monopoly, 194, 200

  • Natural resources, 235

    • allocation formula and, 287

    • DBCFT and, 272

    • offshore indirect transfers and, 161

    • permanent sovereignty principle and, 214, 214n22

    • special tax treatment for activities

    • related to, 321

    • taxation of rents and, 15

    • tax challenges and, 8

    • user data differences from, 203

  • Negative cash flow, uplifting on, 323

  • Netback deduction, 216, 217

  • Net basis taxation, 285–86

  • Netflix, 39, 47

  • Netherlands, 146

    • substance requirements, 164n79

  • Network effects, 198–99

  • Network externalities, 198–99

  • Nexus, 23, 28, 48, 88, 102, 343t

    • cookie, 206–7

    • corporate residence and, 25

    • expanding definition of, 232–33

    • permanent establishment and, 205

    • preferential tax regimes and, 89

    • user-based approaches and, 205–6

  • 1920s compromise, 23

  • Noncooperative jurisdictions, 89, 98–99

  • Nonfinancial firms, debt ratio, 16

  • Nonrenewable resources, 310

  • Nonresident entities

    • service providers, 158

    • Source-based taxation and, 147

  • Norm pricing

    • profit sharing scope reduced by, 325

    • for royalty and tax calculations, 322

  • North German Confederation, 123

O

  • OECD. See Organisation for Economic Co-operation and Development

  • OECD/G20 Project, 94

  • OECD Model Double Taxation Convention on Income and on Capital (OECD Model), 125, 128–30, 132, 256

    • beneficial ownership, 165

    • capital gains and, 160

    • influence of, 126–27

    • limitations-on-benefits provisions, 167

    • offshore indirect transfer provisions, 161–63

    • permanent establishment and, 147–48, 150, 205

    • principal purpose test provision, 168

    • service fee provision, 160

    • service permanent establishment provision, 155

    • services and tax treaties and, 154–55, 157

    • withholding taxes and, 152–53

  • OECD Transfer Pricing Guidelines, 61–64, 66, 67

    • financial transaction recharacterization and, 75

  • Offshore indirect transfers, 161–63, 162f

  • Online customers, 189

  • Operating expenses, 236

  • Optimal tax, 12

  • ORBIS database, 237–38, 238f

  • Organisation for Economic Co-operation and Development (OECD), 23, 28, 35, 44n14, 53, 80

    • corporate tax income rates in, 103

    • formation of, 125

    • Forum on Harmful Tax Practices, 93, 94, 96, 249

    • harmful tax practice initiatives, 94–98, 95f

    • hybrid entities and, 119

    • Inclusive Framework, 3, 233, 248, 258, 341, 351

    • Pillar One proposal, 204–5

    • Pillar Two approach, 244, 258

    • on ring-fencing, 221

    • Taskforce on the Digital Economy, 233

    • tax transparency standards, 98

    • territorial and worldwide tax systems in, 28, 29

    • transfer pricing guidelines, 60, 61, 70

    • See also Forum on Harmful Tax Practices

  • Organisation for European Economic Cooperation (OEEC), 125

  • Origin-based profit taxes, 265

  • Origin-based sales factors, 210

  • Outbound investment, 255, 346, 352

  • Outsourcing, 36

  • Ownership-based taxation, 260–63

  • Ownership structure

    • consolidated tax base, 285

    • formulary apportionment and, 289

P

  • Paid-on-behalf production sharing, 329

  • Papua New Guinea, 333n41

  • Paradise papers, 3

  • Passive income payments, 48, 231

    • residence-based taxation and, 53

    • source countries of, 109

    • taxing, 28

  • Pass-through entities, 115

  • Pass-through treatment, 261

  • Patent box regimes, 44, 53, 89

  • Patents, 219

  • Peer-to-peer exports, 204–5

  • Pension funds, 17

  • Permanent establishment, 28, 147–51, 158, 231

    • agency and, 148–49, 233

    • artificial structures for avoiding, 236

    • commissionaire arrangements and, 149n44, 233

    • digital, 233

    • investment-or asset-based approaches, 207–9

    • project-based, 232

    • remittances by, 234

    • servers as, 206

    • services and, 154–55, 159, 232

    • user-based approaches, 205–7

    • user data and, 204–9

  • Permanent home available, 132

  • Permanent sovereignty principle, 214, 214n22

  • Personal income taxes, 261–62

  • Petroleum fiscal regimes, 311, 313f, 326, 327t–28t, 336n46

    • revenue through royalties, 329

    • royalty on, 321

  • Petroleum products, mispricing of, 313

  • Pillar One proposal, 204–5

  • Pillar Two approach, 244, 258

  • Platform-based digitalized businesses, 200

  • Platform for Collaboration on Tax, 4

  • Platform revenue, 218

  • Preferential tax regimes, 235

    • categories of, 97–98

    • initiatives to limit, 88

    • nexus and, 89

    • profit shifting and, 182, 183t

    • source-based taxation and, 230

    • tax competition harm reduction and, 92

    • welfare and, 92

  • Prévost case, 166

  • Primary taxing rights, 6

  • Principal purpose test provision, 168

  • Private equity, 72

  • Production-based instruments, 214, 214n24

  • Production sharing contract regime, 337

  • Production-sharing contracts, 322n30, 325

  • Profit allocation, 64, 250–51

    • digitalization and, 209–13

    • strengthening, 235–47

  • Profit attribution, 7

  • Profit-based instruments, 214

  • Profit margins, 82

    • determining, 68–69

    • risk aversion and, 65

    • royalties and, 217n27

    • services and, 158, 159

  • Profit shifting, 7, 8, 27, 39, 61, 103, 158, 175, 314

    • CFCs and, 178

    • costs of, 180–81

    • countering, 71

    • DBCFT and, 268

    • with debt, 60

    • debt financing and, 70–81

    • evidence of impacts, 184–86

    • financial transactions for, 74

    • in fiscal regimes, 326

    • government behavior and, 179–80

    • heterogeneous capital and effects of, 182–84

    • internal transaction mispricing and, 236

    • intra-company royalties for, 215

    • intragroup loans and, 73

    • investment and, 176, 179, 184–85

    • limits of, 176–77

    • mobile capital and effects of, 176–82

    • modeling, 177–79

    • preferential tax regimes and, 182, 183t

    • production-based instruments to protect from, 214n24

    • research and development and, 52

    • safe-harbor limits to safeguard, 326

    • tax competition and, 92

    • tax rate impact on, 181–82

    • thin capitalization rules and, 177–78

    • transfer pricing and, 177, 185

    • vulnerability, 322

  • Programme of Work (OECD), 305

  • Project-based permanent establishment, 232

  • Project profits, price sensitivity, 311

  • Prussia, 123

  • Public beneficial ownership registers, 256, 256n5

  • Publicly listed firms, consolidated tax base, 285

  • Pure cash-flow tax, 323n34

Q

  • Quasi rents, 13

  • Quebec, Canada, independent corporate income taxes in, 294

R

  • RadioShack, 197

  • R-base cash-flow tax, 17–20

    • DBCFT and, 267

  • Reciprocity

    • de jure, 135–36

    • tax treaties and, 135–36, 139

    • treaty shopping and, 163

  • Redomiciling, 118

  • Related-party dealings, 26

  • Related-party debt financing, 315

  • Related-party loans, 241

  • Related-party trade, 40–41

  • Related-party transactions, 245

  • Relocation, 287

  • Remittances, 234

  • Rents, 12–13

    • royalties as tax on, 218

  • Rent taxes, 11, 17–21, 324, 324n37

    • corporate equity or capital allowances, 19–20

    • monopoly and, 47

    • practical experiences with, 20–21

  • Repatriations, 111, 112

  • Report on Double Taxation and Tax Evasion (League of Nations), 124

  • Research and development activities, 52

  • Research and development expenditures, 43–44

  • Residence, 343t

    • capital gains and, 160

    • corporate, 24–25, 26t

    • definitions of, 256–57

    • determining, 107

    • manipulation of, 113–14

  • Residence-based minimum tax, 348

  • Residence-based taxation, 6, 7, 23, 107, 253

    • allocation by formula and, 259–60

    • anti-avoidance rules and, 114–20

    • challenges of, 110–14

    • conduit arrangements and, 164

    • current context of, 109–10

    • deferral and, 110–12

    • historical background for, 108–9

    • hybrid entities and, 118–19

    • intangibles and, 248

    • passive income payments and, 53

    • taxing owners of corporations and, 260–63

  • Residence-residence double taxation, 140

  • Residual profit, 299, 343t, 346, 348

  • Residual profit allocation, 213

    • efficiency aspects of, 304

    • formulary apportionment, 299–304

    • international tax reforms, 335–36

    • potential revenue impact of, 301–4, 302f, 303f

  • Resource charges, 214

  • Resource extraction, 311–12

  • Resource rent cash flow tax, 324

  • Resource rent tax, 321

    • backloading, 323

    • corporate income tax replaced by, 325

    • DBCFT and corporate income tax compared to, 334t

    • design of, 323

    • royalty offset by, 322

  • Resource rent tax regime, 337

  • Resource revenue collections, 313f

  • Resource-rich countries

    • new fiscal regime for, 321–22

    • tax reforms and, 309

  • Resource-rich developing countries

    • base erosion and tax competition, 318–19

    • extractive industries and tax implications, 310–13

    • gaps in local capacity, 319–20

    • international tax challenges of, 314–20

    • international tax reforms for, 333–36

    • minimum tax for, 333

    • protecting taxing rights, 318

    • tax reform design and implementation issues, 323–26

    • tax reform for extractive industries, 320–29

  • Restructuring, 245

  • Revenue attribution, user data and, 217

  • Revenue foregone approach, 144–45, 144n32, 145t

  • Revenue implications, formulary apportionment, 291f

  • Revenue mobilization, 70, 356

  • R+F cash-flow tax, 18

    • destination base, 272

  • Ring-fencing, 208, 221

  • Risk

    • aggregate, 59

    • allocation of, 60, 62, 64–66, 68

    • analysis in transfer pricing, 60–70

    • average returns and, 69

    • deconstruction of, 62–64

    • defining, 61–62

    • expected returns and, 63

    • intellectual property and, 66

    • intragroup loans and, 76

    • tax planning and allocation of, 69–70

  • Risk aversion, implicit assumption about, 65–66

  • Routine profit, 299–301

  • Royalties, 43, 49, 51, 214n24

    • DBCFT and, 272

    • designing, for user-generated value, 215–18

    • formulary apportionment and user-based, 220

    • intangibles and, 219

    • intellectual property and, 219

    • intra-company, 215

    • petroleum fiscal regimes revenue through, 329

    • profit margins and, 217n27

    • resource extraction and, 323

    • as tax on rents, 218

    • on user-based revenues, 219–21

    • user-based revenues and, 219–20

    • on user-generated value, 213–18

    • withholding taxes and, 152

S

  • Safe harbor limits, 326

  • Safe harbor rules, 218, 240

  • Sales by destination, as apportionment factor, 287

  • Sales tax, 265, 266, 266t

    • in South Dakota, 293

  • SAP, 39

  • S-base cash-flow tax, 18, 20

    • destination base, 272

  • Scale effects, 199

  • Sealed-bid auctions, 197n8

  • Search engines, 192

  • Secrecy jurisdictions, welfare effects of shutting down, 92–94

  • Secret comparables, 238

  • Sector-specific formulae

    • extractive industries, 297–99

    • financial sector, 296–97

  • Self-employed entrepreneurs, 12

  • Separate accounting, 26, 209–10

  • Service and management fees, OECD and UN model differences, 128

  • Service fee provisions, 158–60

  • Service permanent establishment, 155, 156f, 157, 159, 232

  • Services

    • arm’s length principle and, 42

    • cross-border, 157

    • international trade in, 41–42, 41f, 42f

    • intragroup transactions of, 53

    • low-tax jurisdictions and global trade in, 44–45

    • nonresident providers of, 158

    • permanent establishment and, 148, 154–55

    • tax treaties and technical, 154–60

    • transfer pricing rules and, 42

    • user data exchanged for, 203

  • Shareholdings, 160–61

  • Shiftable taxable income, 27

  • Shocks, offsetting, 59

  • Silk Road, 34

  • Simple-tax royalty regime, 337

  • Sixth method, 325n40

  • Smile curve, 43, 43f

  • Snapchat, 207

  • Social media, 45, 192

    • user data and, 203

  • source-based taxation, 6, 7, 23, 107, 109

    • capital gains and, 234–35

    • conduit arrangements and, 164

    • expanding definitions, 231–35

    • expanding nexus, 232–33

    • income types in, 231

    • legal definitions in, 229

    • multinational enterprises and, 229–30, 236

    • nonresident entities and, 147

    • strengthening profit allocation, 235–47

    • tax competition and, 230, 247–51

    • user data and, 201, 204

  • Source-based taxes, 13

  • Source-country taxation, 343t

    • of nonresident service providers, 158

    • tax treaties reducing, 140

  • Source-country withholding, 151

  • Source principle, 343t

  • Source-residence double taxation, 140

  • Source-residence principle, 49

    • global firms and, 51–53

  • Sources of income

    • defining, 26–27

    • digitalization and, 231–32

  • Source-source double taxation, 140

  • South Dakota, sales tax in, 293

  • South Dakota vs. Wayfair, Inc., 205–6

  • Southern African Development Community, 347

  • Special apportionment formulae, 296n10

  • Special economic zones, 235

  • Special purpose vehicles, 255

  • Special resource revenue taxes, 272

  • Specific comprehensive business income tax, 16n3

  • Spillovers, 91–92

  • Spotify, 46f

  • Standards-of-secrecy rules, 239

  • Stateless income, 113

  • Stepping-stone conduits, 165

  • Strategic tax interactions, 90–92

  • Subcontractors, 315–17, 320

  • Subsidiaries, 255

  • Substance-over-form test, 166

  • Substance requirements, 164, 164n79

  • Substantial activity, 88

  • Substantial capital outlay, 311

  • Sustained user relationship, 208

  • Switzerland, 96, 100

T

  • Taskforce on the Digital Economy, 233

  • Tax

    • on capital income, 12–13

    • on saving, 12

    • See also specific topics

  • Taxation

    • foreign direct investment sensitivity to, 39

    • intellectual property and, 44

    • multinational enterprises and, 38–40, 48–53

  • Tax avoidance, 190

    • arm’s length principle and, 236

    • costs of, 175

    • through deferral, 110–12

    • disguising equity as debt, 71–72

    • formulary apportionment and, 288–89

    • perceived, 3

    • related-party loans and, 241

    • residence-based taxation and, 107

    • transfer pricing rules to limit, 235

    • treaty-related, 130

  • Tax base

    • allocation by formula, 259–60

    • corporate income taxes and, 274–75

    • debt financing and erosion of, 70

    • debt ratio elasticity and erosion of, 71

    • international allocation of, 253

    • locating, 27–28

    • measures to broaden or narrow, 100

    • mobile and immobile, 89, 92, 182

    • ownership and, 260–63

  • Tax certainty, 345

  • Tax competition, 7, 11, 52, 87, 176, 190, 290–91, 345, 355–56

    • becoming less harmful, 99–103

    • DBCFT and, 268

    • EU and, 89

    • harmful practices in, 90–94

    • inefficiently low rates and, 90–91

    • initiatives to reduce harmful forms of, 87

    • minimum taxes and, 257

    • nexus approach and, 102

    • preferential tax regimes and reducing harm of, 92

    • profit shifting and, 92

    • residence-based taxation and, 107

    • of resource-rich developing countries, 318–19

    • shortcomings of existing standards, 102–3

    • source-based taxation and, 230, 247–51

    • spillovers from, 91–92

    • welfare reduction and, 88

  • Tax compliance, 239, 320

    • tax treaties and, 141

  • Tax coordination, 94

    • reform implementation and, 351–52

  • Tax Cuts and Jobs Act of 2017 (US), 29, 112, 118, 244, 258

  • Tax directives, 8

  • Tax havens, 35, 93

  • Tax incentives, 143

    • in develop countries, 103

    • innovation and, 44

  • Taxing rights, 23

    • allocation of, 48–49

    • assigning, 23

    • differences across countries and, 49

    • user data and, 201–4

    • users as basis for, 201–13

  • Tax Justice Network, 263n18

  • Tax legislation, 317

  • Tax-minimizing practices, 34

  • Tax planning, 82

    • difference concerns for, in developed and developing countries, 69–70

  • Tax rates

    • average effective, 101f

    • profit shifting impact of, 181–82

    • tax competition and inefficiently low, 90–91

  • Tax royalty regime, 336

  • Tax secrecy rules, 238

  • Tax transparency, 98

  • Tax treaties, 8, 23, 49, 50f, 109, 318–19, 343t

    • benefits of, 139–43

    • costs of, 143–47

    • developing countries and, 133–39, 169–70

    • development of network of, 127f

    • foreign direct investment and, 142

    • history of, 123–26

    • interpretation of, 128–29

    • investment flows and, 136, 139

    • key allocative provisions, 147–63

    • legal considerations in, 127–30

    • MLIs and, 132

    • model, of 2017, 130–33

    • multinational enterprises exploiting, 236

    • OECD and UN model influences on, 126

    • permanent establishment and, 147–51

    • policy challenges, 169

    • reciprocity agreements, 135–36, 139

    • service permanent establishment provisions, 155

    • Source-country taxation reduction and, 140

    • structured approach, 246

    • tax compliance and, 141

    • technical services and, 154–60

    • withholding taxes and, 151–54

  • Tax wars, 3

  • Tech giants, 189

  • Technical services, tax treaties and, 154–60

  • Telecommunications Act of 1996, 201

  • Territorial tax systems, 28, 29, 111, 118, 253, 344t

  • Tin capitalization rules, 77–78, 241–43, 242f

    • profit shifting and, 177–78

  • Third-party sales, 287

  • Tree-factor formula, in Massachusetts, 293

  • Tracking cookies, 192

  • Trade

    • cross-border, 151, 229

    • DBCFT and balance of, 270f

    • digital, 45–47, 46f

    • global, 41, 45–47, 46f

    • international, 33–34, 40–45, 41f, 42f

    • intrafirm, 41

    • related-party, 40–41

    • tax treaties promoting, 140–41

  • Trade deficits, 269

  • Trademarks, 219

  • Trading companies, 36

  • Transfer mispricing, 39, 40t

  • Transfer pricing, 8, 59, 152, 222

    • commercial rationality problem and, 74

    • data sources for, 237–40

    • debt financing and, 73–77

    • documenting, 239–40

    • legislation for, 236–37, 237f

    • manipulation of, 27, 255

    • OECD guidelines, 60, 61

    • prescriptive approaches, 240–41

    • profit shifting and, 177, 185

    • risk allocation and, 64

    • risk analysis in, 60–70

    • services trade and, 42

    • tax avoidance limiting with rules for, 235

  • Transparency, 98, 261

    • welfare and, 93

  • Treaty-related tax avoidance, 130

  • Treaty shopping, 130, 145–46, 236, 343t

    • beneficial ownership and, 165–66

    • conduit structures and, 164

    • limitation-on-benefits provision, 166–67

    • principal purpose test provision, 168

    • as treaty abuse, 163–64

  • Turnover taxes, 219–21

  • Twitter, 207

U

  • Uganda, 146

  • UNCTAD. See United Nations Conference on Trade and Development

  • UNIDO. See United Nations Industrial Development Organization

  • Unitary taxation, 348

  • Unitary tax formula, factor distortions and, 287–88

  • United Arab Emirates, 146

  • United Kingdom

    • beneficial ownership registers, 256, 256n5

    • diverted profits taxes, 246, 345

    • residual profit allocation, 300

    • territorial tax system, 111

  • United Nations (UN), 23

    • permanent sovereignty principle and, 214n22

    • Treaty Model, 125

  • United Nations Conference on Trade and Development (UNCTAD), 40

  • United Nations Industrial Development Organization (UNIDO), 143

  • United States

    • anti-treaty-shopping efforts, 166–67

    • CFC rules, 114–15

    • DBCFT and, 268

    • Dodd-Frank Act, 298, 298n11

    • earning stripping rules, 241

    • equity disguised as debt and, 72

    • exit taxes, 119

    • extractive industries, 297, 298

    • formulary apportionment in, 210, 212, 292–93

    • Global Intangible Low Taxed Income, 248, 258–59, 345, 346

    • legal force of treaties in, 127n9

    • market power and competition in, 47

    • minimum taxes and, 258

    • personal income taxes and, 262

    • residence definitions and, 256

    • residual profit allocation, 300

    • secret comparables and, 238

    • tax avoidance costs to, 175

    • tax competition and, 100

    • territorial tax systems and, 111, 118

    • worldwide tax system, 114

  • UN Model Double Taxation Convention between Developed and Developing Countries (UN Model), 125, 128–30, 132–33

    • beneficial ownership, 165

    • capital gains and, 160, 235

    • influence of, 126–27

    • limitations-on-benefits provisions, 167

    • offshore indirect transfer provisions, 161–63

    • permanent establishment and, 147–48, 150

    • principal purpose test provision, 168

    • service fee provision, 160

    • services and tax treaties and, 154–55, 157

    • withholding taxes and, 153

  • UN Model Double Tax Treaty, 312n6

  • Untaxed assets, 279–80

  • Uplift, 323, 324n35

  • User-based approaches to permanent establishment, 205–7

  • User-based revenues, royalties on, 219–21

  • User countries, 201

  • User data, 222, 223

    • collection of, 193–95

    • compensation for, 202–3

    • custody of, 203

    • determinants of value of, 196–97

    • extraction of, 214

    • imputing value of, 197–98

    • investment-or asset-based approaches, 207–9

    • network externalities and value of, 198–99

    • ownership and access to, 194

    • permanent establishment and, 204–9

    • production and ownership of, taxing rights and, 201–4

    • revenue attribution and, 217

    • sale of, 193

    • sovereignty and, 214

    • taxation or regulation questions for, 199–201

    • uses of, 193

    • value of, 195–201, 224

  • User-generated content, 207

  • User-generated value, 191–201

    • approximating, 216

    • royalties on, 213–21

  • User jurisdictions, 205

  • User participation, 190

  • Users

    • as basis for taxation rights, 201–13

    • data generation by, 191–93

    • volume and intensity of, 211

  • User value proposal, 233

  • US Treasury report, 16

V

  • Value-added tax (VAT), 14, 20–21 249–50, 265, 266, 266t, 349, 357

    • DBCFT similarities and differences, 275–76

    • rates, 276, 276f

  • Value creation

    • alternative tax systems and, 80

    • digital companies and, 45

    • global firm challenges for locating, 52

    • locating, 35

    • user role in, 190

  • VAT. See Value-added tax

  • Vertical firms, 38

  • Vertically integrated businesses, 63

  • Vienna Convention, 129

  • Vietnam War, 34

  • Virtual access, 206

  • Volume-based data valuation, 216

  • Voluntary secrecy countries, 263n18

W

  • Water’s edge system, 286

    • Common Consolidated Corporate Tax base as, 295

  • Wayfair, 205–6

  • Web applications, location data from, 192

  • Web scraping, 193n5

  • Welfare

    • preferential tax regimes and, 92

    • shutting down low-tax and secrecy jurisdictions and, 92–94

    • transparency and, 93

  • West African Economic and Monetary Union, 94, 347

  • Western and Central African Economic and Monetary regions, 250

  • WhatsApp, 197

  • Withholding taxes, 231, 236, 236n18, 244–45, 325

    • on capital income, 49

    • DBCFT and, 350

    • in emerging economy tax treaties, 339t

    • expanding, 233–34

    • statistics on, 153t

    • tax treaties and, 151–54

  • Withholding tax rates, 135–36

  • World Intellectual Property Organization, 43

  • World Trade Organization (WTO), 40–41, 347, 349, 357

  • Worldwide tax system, 28, 29

  • WTO. See World Trade Organization

X

  • X tax, 18

Y

  • YouTube, 207

Why Reform Is Needed and How It Could Be Designed