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
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:4094 |
| Date | January 2014 |
| Creators | Lang, Michael, Owens, Jeffrey |
| Publisher | WU Vienna University of Economics and Business, Universität Wien |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Paper, NonPeerReviewed |
| Format | application/pdf |
| Relation | http://epub.wu.ac.at/4094/ |
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