UN vs OECD Model Tax Conventions - An alternative for development through formulary apportionment?
(2025) HARN60 20251Department of Business Law
- Abstract
- The purpose of this thesis is to evaluate the compatibility of the current dominant approach in international taxation for intragroup transactions, based on arm’s length principle, with international agreements on development. In this sense, the thesis aims to explore the viability of formulary apportionment as an alternative that could reduce contradictions between international tax law and development frameworks.
To achieve this, a comparative analysis is applied to the UN and OECD Model Tax Conventions with respect to their main differing provisions dealing with formulary apportionment, as well as understanding how their institutional structures foster the participation of developing countries in norm setting processes. Further, the... (More) - The purpose of this thesis is to evaluate the compatibility of the current dominant approach in international taxation for intragroup transactions, based on arm’s length principle, with international agreements on development. In this sense, the thesis aims to explore the viability of formulary apportionment as an alternative that could reduce contradictions between international tax law and development frameworks.
To achieve this, a comparative analysis is applied to the UN and OECD Model Tax Conventions with respect to their main differing provisions dealing with formulary apportionment, as well as understanding how their institutional structures foster the participation of developing countries in norm setting processes. Further, the thesis explores how the right to development has been relied on for challenging national practices and for guiding in the interpretation of other sources of law.
Tax revenue constitutes an essential source for mobilizing funds towards development. Therefore, the consequences on the protection of tax bases derived from the election between either method of allocation of business profits are relevant for the fulfilment of liabilities related to development commitments. In order to do so, formulary apportionment could represent a viable substitute to overcome the limitations of arm’s length principle, which have a special negative impact on developing countries.
This alternative approach based on formulary apportionment has received continued interest, reflected in its application at domestic level and the proposals introduced in the international tax sphere. Moreover, the current tax law framework already provides valuable tools that could serve as basis for its effective implementation, potentially contributing to a better alignment with development frameworks. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9192225
- author
- de la Fuente de San José, Clara LU
- supervisor
-
- Axel Hilling LU
- organization
- course
- HARN60 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- formulary apportionment, arm's length principle, UN and OECD Model Tax Conventions, international development, financing for development
- language
- English
- id
- 9192225
- date added to LUP
- 2025-06-03 15:19:57
- date last changed
- 2025-06-03 15:19:57
@misc{9192225,
abstract = {{The purpose of this thesis is to evaluate the compatibility of the current dominant approach in international taxation for intragroup transactions, based on arm’s length principle, with international agreements on development. In this sense, the thesis aims to explore the viability of formulary apportionment as an alternative that could reduce contradictions between international tax law and development frameworks.
To achieve this, a comparative analysis is applied to the UN and OECD Model Tax Conventions with respect to their main differing provisions dealing with formulary apportionment, as well as understanding how their institutional structures foster the participation of developing countries in norm setting processes. Further, the thesis explores how the right to development has been relied on for challenging national practices and for guiding in the interpretation of other sources of law.
Tax revenue constitutes an essential source for mobilizing funds towards development. Therefore, the consequences on the protection of tax bases derived from the election between either method of allocation of business profits are relevant for the fulfilment of liabilities related to development commitments. In order to do so, formulary apportionment could represent a viable substitute to overcome the limitations of arm’s length principle, which have a special negative impact on developing countries.
This alternative approach based on formulary apportionment has received continued interest, reflected in its application at domestic level and the proposals introduced in the international tax sphere. Moreover, the current tax law framework already provides valuable tools that could serve as basis for its effective implementation, potentially contributing to a better alignment with development frameworks.}},
author = {{de la Fuente de San José, Clara}},
language = {{eng}},
note = {{Student Paper}},
title = {{UN vs OECD Model Tax Conventions - An alternative for development through formulary apportionment?}},
year = {{2025}},
}