International Tax

Low-income countries are more dependent on corporate income tax revenue than richer countries, and at the same time, disproportionately affected by multinational tax avoidance. Our research on this theme investigates ways in which developing countries can protect their tax bases, including through simplified transfer pricing methods and improved tax treaty policies. Our work on this theme also includes examination of the OECD’s Base Erosion and Profit Shifting (BEPS) process from the perspective of developing countries, as well as exploring alternative methods of taxing multinational companies, namely unitary taxation.

Publications:

December 2019
Review of Tax Treaty Practices and Policy Framework in Africa
by Catherine Ngina Mutava

In recent years, tax treaties concluded by sub-Saharan African countries have become more residence-based with fewer provisions allocating taxing rights to the source countries. This trend is observed in treaties signed with OECD countries in particular. For countries which are capital importers, as is the case with most African countries, this means that these countries…

Read more
August 2019
Safe Harbour Regimes in Transfer Pricing: An African Perspective
by Alexander Ezenagu

Applying transfer pricing rules in Africa poses great difficulties. There are few reliable comparables to benchmark prices and terms fixed by related entities in their transactions with each other. This means that jurisdictions struggle with applying the arm’s length principle in intra-firm dealings, as prescribed by tax treaties and domestic laws. Furthermore, the requirement for…

Read more
Safe Harbour Regimes in Transfer Pricing: An African Perspective
by Alexander Ezenagu

The global consensus to treat multinational enterprises (MNEs) as separate entities for tax purposes requires them to act at arm’s length in the transfer of goods and services, especially setting the prices of such transfers. This means that, although in practice they are integrated entities under the ownership and control of a parent company, operating…

Read more
The New Politics of Global Tax Governance: Taking Stock a Decade After the Financial Crisis
by Rasmus Corlin Christensen & Martin Hearson

The financial crisis of 2007–2009 is now broadly recognised as a once-in-a-generation inflection point in the history of global economic governance. It has also prompted a reconsideration of established paradigms in international political economy (IPE) scholarship. Developments in global tax governance open a window onto these ongoing changes, and in this essay we discuss four…

Read more
February 2019
Taxing Multinational Business in Lower-Income Countries: Economics, Politics and Social Responsibility
by Michael C. Durst

The world’s lower-income countries face an urgent need for public revenue to build social and economic infrastructure. These countries, however, face a dilemma in seeking to tax the income of multinational companies operating within their borders. On the one hand, because lower-income countries face substantial limitations on their ability to raise revenue from broad-based taxes…

Read more
November 2018
China’s Challenge to International Tax Rules and the Implications for Global Economic Governance
by Martin Hearson & Wilson Prichard

Twentieth century institutions of global economic governance face a profound challenge adapting to the rise of emerging markets and, especially, China’s rise. This is especially the case for the international tax regime, whose institutional home is the OECD and which is based on norms that favour capital exporting states. To understand the nature of the…

Read more
November 2018
Problems of Transfer Pricing and Possibilities for its Simplification
by Sol Picciotto

This ICTD Research in Brief is a two-page summary of ICTD Working paper 86 by Sol Picciotto. This series is aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. The international system for taxation of the profits of multinational enterprises (MNEs) is deeply dysfunctional….

Read more
November 2018
Problems of Transfer Pricing and Possibilities for Simplification
by Sol Picciotto

The defects in the rules for allocation of the income of transnational corporations (TNCs) are at the heart of the current crisis in international corporate taxation. This paper explains how these rules emerged and developed, becoming increasingly complex, as they have shifted from a general concern to ensure a fair and reasonable allocation of the…

Read more
Profit-Split Method: Time for Countries to Apply a Standardized Approach
by Jeffery M. Kadet, Tommaso Faccio & Sol Picciotto

With the OECD issuance in June 2018 of its final guidance on the profit split method, individual countries must determine how they might consider and apply the profit split method (PSM) going forward. The OECD guidance issued reflects a consensus view that included input from the very large number of countries. The need for consensus…

Read more
Taxing Africa: Coercion, Reform and Development
by Mick Moore, Wilson Prichard & Odd-Helge Fjeldstad

Taxing Africa is an accessible and comprehensive introduction to the crucial debates around taxation and development in Africa. Taxation has been seen as the domain of charisma-free accountants, lawyers and number crunchers – an unlikely place to encounter big societal questions about democracy, equity or good governance. Yet it is exactly these issues that pervade…

Read more

Blogs:

December 2019
by Jayati Ghosh & Valpy FitzGerald

The negotiations on corporate taxation at the Organization for Economic Cooperation and Development’s (OECD) BEPS Inclusive Framework initiative have rightly generated much discussion, both on the process and on the proposed changes in tax policies. Allison Christians has pointed to several concerns that developing countries have with both: the proposal is one that has maximum acceptability by the great…

Read more
December 2019
by Martin Hearson & Rasmus Corlin Christensen

The global fight over how—and where—to tax the new digital economy is raging on. Just last week, the Office of the US Trade Representative (USTR) published the conclusions from its investigation into France’s new tax on large tech companies, such as Apple, Facebook, and Google. The USTR found that the French tax discriminates against US companies, and…

Read more
November 2019
by Sol Picciotto

Developing countries are making a significant contribution to the current efforts to reform international tax in the project on base erosion and profit shifting (BEPS), despite the obstacles they face in making their participation effective. It is welcome that since 2016 participation in the process was open to all countries, through the Inclusive Framework on…

Read more