Why Corporate Taxation Should Mean Source Taxation : A Response to the OECD's Actions Against Base Erosion and Profit Shifting
It is widespread practice around the world that corporate entities pay taxes to the country where they are formally registered and to the country in whose territory they have a permanent establishment. While the former is generally known as the ‘country-of-residence' the latter is usually referred to as the ‘country-of-source'. This article questions separate taxation based on this distinction between the country-of-residence and the country-of-source. It argues for a departure from the traditional international allocation of the right to tax corporate income and suggests that a corporate entity should instead pay income tax exclusively to the countries in which it has relevant business activities. Moreover, in examining the question of where business activities of multinational corporations effectively take place, this article describes criteria for determining source countries. Furthermore, it offers a method for formulary apportionment of corporate income between those countries in which a given multinational corporation generates income. The article argues that source taxation of corporate income would be coherent with the economic nature of corporate income taxation. Source taxation of corporate income would also make the arbitrary concept of corporate residence irrelevant, and it would allow the outdated legal concept of permanent establishment to be abolished.This article takes an interdisciplinary approach to argue from both legal and economic perspectives. It adds to the body of literature that discusses how countries should tax corporate entities doing business across national borders. It also contributes to the ongoing debate about the OECD's recent controversial efforts to prevent corporations shifting profits between countries to minimize their exposure to national tax systems (base erosion and profit sharing, or BEPS)
Year of publication: |
2017
|
---|---|
Authors: | Cavelti, Luzius U. |
Other Persons: | Jaag, Christian (contributor) ; Rohner, Tobias (contributor) |
Publisher: |
[2017]: [S.l.] : SSRN |
Subject: | Unternehmensbesteuerung | Corporate taxation | OECD-Staaten | OECD countries | Steuervermeidung | Tax avoidance | Körperschaftsteuer | Corporate income tax | Internationales Steuerrecht | International tax law | Besteuerungsverfahren | Taxation procedure |
Saved in:
freely available
Extent: | 1 Online-Ressource (6 p) |
---|---|
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | In: World Tax Journal (IBFD), Vol. 9, No. 3, pp. 352 (2017) Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 2, 2016 erstellt |
Other identifiers: | 10.2139/ssrn.2773614 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012969372