Addressing Aggressive Tax Planning through Unitary Tax or Self-Regulation- A Study on the Possible Need for an International Tax Reform
(2020) JURM02 20201Department of Law
Faculty of Law
- Abstract
- Domestic and international regulations aiming to facilitate international trade and investment today enable multinational corporations (MNCs) to operate transnationally through the use of branches or subsidiary companies. Within the field of corporate taxation, the lack of a global and universal tax system regulating international tax matters however allows MNCs to exploit gaps and loopholes within such regulations to lower or even eradicate their tax burden. Regulations on national and international levels have been somewhat effective in counteracting the prevalence of such corporate tax avoidance, often referred to as ‘aggressive tax planning’ (ATP), foremost through the OECD’s ‘Action Plan on Base Erosion and Profit Shifting’. However,... (More)
- Domestic and international regulations aiming to facilitate international trade and investment today enable multinational corporations (MNCs) to operate transnationally through the use of branches or subsidiary companies. Within the field of corporate taxation, the lack of a global and universal tax system regulating international tax matters however allows MNCs to exploit gaps and loopholes within such regulations to lower or even eradicate their tax burden. Regulations on national and international levels have been somewhat effective in counteracting the prevalence of such corporate tax avoidance, often referred to as ‘aggressive tax planning’ (ATP), foremost through the OECD’s ‘Action Plan on Base Erosion and Profit Shifting’. However, international tax rules based on the separate entity principle and the arm’s length principle continue to facilitate aggressive tax planning and corporate tax avoidance remains a vast and global issue.
The effects of corporate tax avoidance demonstrate the pressing need for a reformation of current international tax rules. Although a unitary tax approach similar to the ‘Common Consolidated Corporate Tax Base’ proposal issued by the European Union could be effective in combatting ATP, the implementation of such a solution may prove difficult and would require the harmonization of national and international tax rules. The prospects of such an international reform being implemented on a global scale in the near future are therefore slim. A more plausible yet still effective alternative is self-regulation by MNCs. As public and investor pressure on MNCs to act responsibly in regard to their tax management is rapidly increasing, and soft law standards are placing higher demands on corporations to act in accordance with both the letter and the spirit of relevant tax laws, corporations are increasingly incentivized to act as “good tax citizens”. Although self-regulation alone may not eradicate ATP, it is clearly a crucial complement to existing international anti-avoidance regulations. (Less) - Abstract (Swedish)
- Regelverk på nationell och internationell nivå som syftar till att uppmuntra och underlätta internationella investeringar och handel möjliggör idag för multinationella företag att verka transnationellt genom användning av filialer och dotterbolag. När det kommer till företagsbeskattning har avsaknaden av ett globalt och universellt skattesystem för att reglera internationella skattefrågor dock möjliggjort för multinationella företag att utnyttja kryphål inom sådana regleringar, för att reducera eller till och med helt undvika sitt skatteansvar. Lagstiftning på nationell och internationell nivå har varit förhållandevis effektivt för att motverka sådan skatteflykt, ofta kallat ’aggressiv skatteplanering’, framför allt genom OECD:s ’Action... (More)
- Regelverk på nationell och internationell nivå som syftar till att uppmuntra och underlätta internationella investeringar och handel möjliggör idag för multinationella företag att verka transnationellt genom användning av filialer och dotterbolag. När det kommer till företagsbeskattning har avsaknaden av ett globalt och universellt skattesystem för att reglera internationella skattefrågor dock möjliggjort för multinationella företag att utnyttja kryphål inom sådana regleringar, för att reducera eller till och med helt undvika sitt skatteansvar. Lagstiftning på nationell och internationell nivå har varit förhållandevis effektivt för att motverka sådan skatteflykt, ofta kallat ’aggressiv skatteplanering’, framför allt genom OECD:s ’Action Plan on Base Erosion and Profit Shifting’. Internationella skatteregler baserade på ’separate entity principle’ och armlängdsprincipen fortsätter däremot att möjliggöra aggressiv skatteplanering och företagsskatteflykt är fortfarande ett utbrett och globalt problem.
Effekterna av aggressiv skatteplanering illustrerar det överhängande behovet av en reformering av de nuvarande internationella skattereglerna. Även om en gemensam företagsskattebas likt det som föreslagits av Europeiska Unionen effektivt skulle kunna motverka aggressiv skatteplanering, skulle implementeringen av en sådan reform på global nivå kräva en harmonisering av nationella och internationella skatteregler och utsikterna för en sådan lösning är små. Ett mer troligt men likväl effektivt alternativ är självreglering. I takt med att påtryckningar från såväl allmänheten som investerare gällande multinationella företags ansvar för sin skattehantering ökar och "soft law" i form av icke-bindande principer och normer ställer allt högre krav på företag att agera i enlighet med såväl ordalydelse som syfte av relevant skattelagstiftning, blir det allt viktigare för företag att agera som ”good tax citizens”. Även om självreglering inte på egen hand kan eliminera aggressiv skatteplanering, är det uppenbarligen ett viktigt komplement till existerande skatteregler mot aggressiv skatteplanering. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9010946
- author
- Bendixen Kettis, Astrid LU
- supervisor
- organization
- course
- JURM02 20201
- year
- 2020
- type
- H3 - Professional qualifications (4 Years - )
- subject
- keywords
- International Tax Law, Corporate Taxation, CSR
- language
- English
- id
- 9010946
- date added to LUP
- 2020-06-23 13:29:11
- date last changed
- 2020-06-23 13:29:11
@misc{9010946,
abstract = {{Domestic and international regulations aiming to facilitate international trade and investment today enable multinational corporations (MNCs) to operate transnationally through the use of branches or subsidiary companies. Within the field of corporate taxation, the lack of a global and universal tax system regulating international tax matters however allows MNCs to exploit gaps and loopholes within such regulations to lower or even eradicate their tax burden. Regulations on national and international levels have been somewhat effective in counteracting the prevalence of such corporate tax avoidance, often referred to as ‘aggressive tax planning’ (ATP), foremost through the OECD’s ‘Action Plan on Base Erosion and Profit Shifting’. However, international tax rules based on the separate entity principle and the arm’s length principle continue to facilitate aggressive tax planning and corporate tax avoidance remains a vast and global issue.
The effects of corporate tax avoidance demonstrate the pressing need for a reformation of current international tax rules. Although a unitary tax approach similar to the ‘Common Consolidated Corporate Tax Base’ proposal issued by the European Union could be effective in combatting ATP, the implementation of such a solution may prove difficult and would require the harmonization of national and international tax rules. The prospects of such an international reform being implemented on a global scale in the near future are therefore slim. A more plausible yet still effective alternative is self-regulation by MNCs. As public and investor pressure on MNCs to act responsibly in regard to their tax management is rapidly increasing, and soft law standards are placing higher demands on corporations to act in accordance with both the letter and the spirit of relevant tax laws, corporations are increasingly incentivized to act as “good tax citizens”. Although self-regulation alone may not eradicate ATP, it is clearly a crucial complement to existing international anti-avoidance regulations.}},
author = {{Bendixen Kettis, Astrid}},
language = {{eng}},
note = {{Student Paper}},
title = {{Addressing Aggressive Tax Planning through Unitary Tax or Self-Regulation- A Study on the Possible Need for an International Tax Reform}},
year = {{2020}},
}