Taxing Multinational Enterprises as Unitary Firms

Picciotto, Sol

doi:10.2139/ssrn.3120326

Cited by 15 publications

(12 citation statements)

References 26 publications

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“…For some advocates such as tax authorities, it is seen as strengthening the armoury of tax authorities in their analysis of transfer pricing under the current arm's length principle. For others, such as the Tax Justice Network, it is a step along the path to a more radical overhaul of international tax rules for MNEs (Baden and Wigan 2017;Christians 2012;Picciotto 2017). This latter group have long bemoaned deficiencies in arm's length pricing as the standard mechanism for allocating profits of MNEs between different taxing jurisdictions.…”

Section: Country By Country Reportingmentioning

confidence: 99%

Corporate tax avoidance: is tax transparency the solution?

Oats

Tuck

2019

Accounting and Business Research

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Corporate tax avoidance has been a matter of considerable public attention, particularly since the 2008 global financial crisis. The nature of calls for tax reform and increased regulation, advocated most prominently by tax activists and NGOs, has revolved around transparency as a possible corrective to unacceptable tax avoidance, although there is no consensus as to what the term tax avoidance encompasses and when it becomes unacceptable. We examine two responses to calls for increased transparency about the tax affairs of multinational entities: firstly, country by country reporting that provides information to tax authorities, and secondly the UK requirement for publication of tax strategies, whereby large companies put information into the public domain. We find considerable misunderstanding about the benefits of transparency in this setting. By failing to consider the limits of transparency initiatives there is a risk of dysfunctional consequences, for example additional costs in providing and processing additional information, the prospect of increased disputes as new information generates new misinterpretations and uncertainty in determining the final tax position. There is a risk that greater disclosure will not effectively address concerns about unacceptable corporate tax avoidance.

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Section: Country By Country Reportingmentioning

confidence: 99%

Corporate tax avoidance: is tax transparency the solution?

Oats

Tuck

2019

Accounting and Business Research

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“…CBCR was designed to provide the information for this purpose. Proponents of both CBCR and unitary taxation suggest that unitary taxation is a more equitable method of apportioning the total taxable profits of a multinational corporation to the locations where it trades than that offered by the arm's length pricing methodology OECD [49]. Although the use of unitary taxation has not been agreed upon by any global body, it was felt that CBCR information would both open the way toward global unitary taxation and achieve a reduction of tax avoidance and the tax gap relating to corporation tax in the meantime.…”

Section: About Country-by-country Reporting-origins and Purposementioning

confidence: 99%

BEPS Policy Failure—The Case of EU Country-By-Country Reporting¹

2019

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The tax gap between taxes that are “actually” paid and taxes that “ought” to have been paid by multinational corporate entities has become an area of huge public policy concern in the recent decades. This study reviews the impact of new legislation to reveal the tax gap created by the EU banks and financial institutions passed in 2013 and in particular of the quality of the resulting country-by-country reporting (CBCR) requirement for banks. Although resulting tax gap estimates are noted, they suffer due to significant problems in the published data; much of it is due to the quality of the regulation requiring its publication and implementation. The findings reveal a lack of understanding of the technical and structural weaknesses of accounting in a transnational context in the design of this regulation. CBCR is destined to fail in achieving its regulatory objectives in this context unless necessary reform of the regulation is undertaken.

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“…Allocating standards mean different ways of determining an arm's length price, or non-arms' length ways of apportioning the tax base. Experts have endorsed a number of alternatives that include unitary taxation with formulary apportionment 2 (UT+FA) (Avi-Yonah & Tinhanga, 2017;Picciotto, 2017) or a destination-based cash flow tax (DBCFT) (Auerbach, Devereux, Keen, & Vella, 2017) 3 . They endorse these alternatives because they are potentially more robust to illicit profit shifting or because they are conceptually closer to aligning value and taxation.…”

Section: Beps and Digital Taxationmentioning

confidence: 99%

The EU Commission’s digital tax proposals and its cross-platform impact in the EU and the OECD

Lips

2019

Journal of European Integration

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The EU Commission's directive proposals on corporate taxation of digital multinationals, especially the digital services tax (DST), show the increased assertiveness of the Commission on taxation matters. Both inward and outwards in the parallel OECD negotiations on digital taxation. By drawing on Kingdon's Multiple Streams Framework, elite interviews and policy documents, I assess the dynamics of the proposal at the EU and OECD. While the DST will fall short in the EU Council due to unanimity requirements, I argue that the Commission actually achieved its pre-prescribed goals. Within the EU, it provided coherency for unilateral DSTs by member states. At the OECD, the proposals increased the threat of uncoordinated unilateral measures. This created a period of uncertainty and pressured laggard states, which helped lead to a tentative window for reform. As such, the proposals are an example of cross-platform policy entrepreneurship by the EU Commission, projecting influence despite unanimity constraints.

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Taxing Multinational Enterprises as Unitary Firms

Cited by 15 publications

References 26 publications

Corporate tax avoidance: is tax transparency the solution?

Corporate tax avoidance: is tax transparency the solution?

BEPS Policy Failure—The Case of EU Country-By-Country Reporting¹

The EU Commission’s digital tax proposals and its cross-platform impact in the EU and the OECD

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Taxing Multinational Enterprises as Unitary Firms

Cited by 15 publications

References 26 publications

Corporate tax avoidance: is tax transparency the solution?

Corporate tax avoidance: is tax transparency the solution?

BEPS Policy Failure—The Case of EU Country-By-Country Reporting1

The EU Commission’s digital tax proposals and its cross-platform impact in the EU and the OECD

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Product

Resources

About

BEPS Policy Failure—The Case of EU Country-By-Country Reporting¹