Chapter 7 Residence-Based Taxation: A History and Current Issues
Author:
Ms. Victoria J Perry
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Language:
English
Print Publication Date:
26 Feb 2021
Keywords:
Profit shifting; tax competition; tax avoidance; international cooperation; tax reform; multinationals; digitalization; parent company; exit tax; resident company; multinational enterprise; company rule; Controlled foreign corporation rules; Income; Residence-based taxation; Corporate income tax; Global

Abstract

As discussed in previous chapters, source-based taxation faces many difficulties: it is increasingly difficult—conceptually and practically—to allocate profits to where they originate (see Chapter 5). Multinational enterprises can take advantage of such ambiguities by shifting reported profits to jurisdictions with lower tax rates. Countries then face an incentive to compete for tax bases—both reported profits and real investment (see Chapter 6). This chapter turns to residence-based taxation—the other important historical concept for corporate income taxation—to assess the difficulties that have been encountered in its implementation.

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Cover Corporate Income Taxes under Pressure
Corporate Income Taxes under Pressure
Why Reform Is Needed and How It Could Be Designed
ISBN:
9781513511771
Publication Date:
26 Feb 2021
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781513511771.071
Pages:
388