This paper reports on a study of the tax treaty policy of a group of eleven East African countries. African tax treaties tend to follow one of two model treaties, an OECD model treaty that favours the interests of capital exporting nations and a United Nations model treaty that allows capital importing countries to retain more taxing rights. The study compares the policy outcomes in treaties signed by these countries with African nations, with relatively wealthy OECD countries, and with non-African countries that are not members of the OECD. It also compares selected outcomes in African-OECD treaties with those results in treaties between a group of Asian countries and OECD members to see whether African countries have been more or less successful at wringing preferences from wealthier nations. The study suggests the African countries studied have not been as successful in retaining taxing rights in treaties with OECD countries as have Asian countries. On the other hand, OECD countries are often more generous to African countries than are other African countries. (authors' abstract) / Series: WU International Taxation Research Paper Series

The amount of taxes paid by multinational enterprises (MNEs) in host and home countries continues to make headline news. Corporate tax regimes, particularly those in many OECD countries, have never been more complex and the competition to attract and retain foreign direct investment (FDI) has perhaps never been so great. All of these political, legal, economic and competitive realities face countries at a time when they need additional budget revenues. At the June 2012 G-20 Summit in Los Cabos, leaders identified base erosion and profit shifting as key fiscal issue to be addressed. Many are expecting this to translate into a new approach to applying existing international tax standards, an increased pressure to eliminate "corporate tax breaks", enact tougher anti-abuse provisions, and less tolerance of aggressive tax planning. There has been an increased critical focus on transfer pricing, corporate restructuring and double tax treaties. Some have suggested that double tax treaties are eroding the domestic tax bases of developing countries, while others conclude that double tax treaties promote development and FDI and thereby expand the tax base. Dividing up a "revenue pie" has never been easy and the implementation of international tax rules to transparently and predictably allocate revenue to avoid double taxation and double non taxation has never been more adversarial between taxpayers and tax authorities and between tax jurisdictions. It was for these reasons that the Global Tax Policy Center of the Institute for Austrian and International Tax Law (Vienna University of Economics and Business) and the International Tax and Investment Center (ITIC) decided to undertake this study. The objective of our study was to look at the development impact of double taxation treaties and, more broadly, how tax policy can help generate economic growth and prosperity. Legally domestic tax laws are normally subordinate to international double taxation treaties, but in reality a double tax treaty only serves a country as well as its domestic tax regime. We've concluded that the problems affecting developing countries lie not with double tax treaties but rather in weak domestic tax legislation. Our study reviews empirical data from 20 developing countries, including LDCs, middle-to-high income developing countries, resource-rich countries, and BRIICS[1] countries. We hope that the empirical analysis and the conclusions that can be drawn from it can help guide policymakers to refocus their policy objectives to boost capital formation, expanding exports, and protect their domestic tax bases. We believe that a country with strong domestic tax legislation can advance their pursuit of the Millennium Development Goals by affectively utilizing double tax treaties and the related international tax rules to more transparently share and grow their tax base. (authors' abstract) / Series: WU International Taxation Research Paper Series

Worldwide income taxation in the country of residence is a legal dogma of international taxation. We question this dogma from the perspective of relations between developed and developing countries from a legal and economic perspective, and make a modern and fair proposal for tax treaties. We will show under which conditions a developing and a developed country will voluntarily sign a tax treaty where information is exchanged truthfully and whether they should share revenues. Moreover, we will demonstrate how the conclusion of a tax treaty can assist in the implementation of a tax audit system. / Series: WU International Taxation Research Paper Series