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International corporate taxation and developing economies: is global tax harmonization desirable and feasible?

Palomera Zaidel, David LU (2016) EKHM52 20161
Department of Economic History
Abstract
Greater capital mobility and financial integration have generated greater tax avoidance and international tax competition. This has modified negatively the tax systems of countries that keep taxing corporate profits: the system is now more inefficient, might be more regressive and tax authorities have less sovereignty. This is especially relevant for developing economies, since corporate tax revenues are vital for their public finances. This thesis sees greater tax coordination as the only solution to such problems and therefore, after describing the current state of the corporate tax in developing economies, analyses the feasibility of global tax harmonization schemes. Whereas the study recognizes the positive effects that the recent BEPS... (More)
Greater capital mobility and financial integration have generated greater tax avoidance and international tax competition. This has modified negatively the tax systems of countries that keep taxing corporate profits: the system is now more inefficient, might be more regressive and tax authorities have less sovereignty. This is especially relevant for developing economies, since corporate tax revenues are vital for their public finances. This thesis sees greater tax coordination as the only solution to such problems and therefore, after describing the current state of the corporate tax in developing economies, analyses the feasibility of global tax harmonization schemes. Whereas the study recognizes the positive effects that the recent BEPS project of the OECD will produce, it also detects important weaknesses to solve current problems, and concludes that a harmonization scheme, similar to the one proposed by Giovannini and Hines (1990), would generate greater benefits for developing economies, mainly by tackling tax avoidance, reducing tax competition, and incentivizing needed reforms for their tax systems. However, through an exploratory survey of the tax system of 32 developing economies, I also foresee a number of technical and political barriers that could make harmonization, especially if it implies strict implementation of the residence-based principle, unfeasible and undesirable for developing economies. (Less)
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author
Palomera Zaidel, David LU
supervisor
organization
course
EKHM52 20161
year
type
H2 - Master's Degree (Two Years)
subject
keywords
International taxation, corporate tax, tax avoidance, tax competition, tax harmonization
language
English
id
8886428
date added to LUP
2016-09-19 13:40:14
date last changed
2016-09-19 13:40:14
@misc{8886428,
  abstract     = {Greater capital mobility and financial integration have generated greater tax avoidance and international tax competition. This has modified negatively the tax systems of countries that keep taxing corporate profits: the system is now more inefficient, might be more regressive and tax authorities have less sovereignty. This is especially relevant for developing economies, since corporate tax revenues are vital for their public finances. This thesis sees greater tax coordination as the only solution to such problems and therefore, after describing the current state of the corporate tax in developing economies, analyses the feasibility of global tax harmonization schemes. Whereas the study recognizes the positive effects that the recent BEPS project of the OECD will produce, it also detects important weaknesses to solve current problems, and concludes that a harmonization scheme, similar to the one proposed by Giovannini and Hines (1990), would generate greater benefits for developing economies, mainly by tackling tax avoidance, reducing tax competition, and incentivizing needed reforms for their tax systems. However, through an exploratory survey of the tax system of 32 developing economies, I also foresee a number of technical and political barriers that could make harmonization, especially if it implies strict implementation of the residence-based principle, unfeasible and undesirable for developing economies.},
  author       = {Palomera Zaidel, David},
  keyword      = {International taxation,corporate tax,tax avoidance,tax competition,tax harmonization},
  language     = {eng},
  note         = {Student Paper},
  title        = {International corporate taxation and developing economies: is global tax harmonization desirable and feasible?},
  year         = {2016},
}