The taxation of foreign profits - the old view, the new view, and a pragmatic view

In this short paper, we review the criticism of the standard view (the ‘old view’) of foreign profit taxation which goes back to Peggy Musgrave (née Richman, 1963). This ‘new view’ of international taxation is based on recent empirical studies and favours a system where foreign profits are exempt from tax. We critically discuss the debate between old view and new view proponents and, finally, confront the two with a ‘pragmatic view’ on foreign profit taxation which crucially builds on compliance and tax administration cost.