Evaluating BEPS : a reconsideration of the benefits principle and proposal for UN oversight

Resource Information

The work Evaluating BEPS : a reconsideration of the benefits principle and proposal for UN oversight represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Continuing Resources.

Label

Evaluating BEPS : a reconsideration of the benefits principle and proposal for UN oversight

Creator

• Avi-Yonah, R.S
• Xu, H. (Haiyan)

Subject

• IGA
• Mutual Administrative Assistance Convention
• United Nations
• benefit principle
• BEPS
• source principle of taxation
• tax avoidance
• tax evasion
• residence principle of taxation
• FATCA

Language

• eng
• eng

Summary

The financial crisis of 2008 and great recession that followed have exacerbated income inequality within and between countries. In the aftermath of the economic turbulence, politicians have turned their attention to the twin problems of individual tax evasion and corporate tax avoidance. US legislators enacted the Foreign Account Tax Compliance Act (FATCA), leading to the US signing a series of Intergovernmental Agreements (IGAs) for the exchange of tax information. The OECD developed the Multilateral Agreement for Administrative Assistance in Tax Matters (MAATM) and initiated the Base Erosion and Profit Shifting (BEPS) project to reduce tax evasion and tax avoidance globally. Although these efforts were well-intended, this article argues that the tax policy response to the financial crisis and recession has ultimately been inadequate. The problem, which is discussed in-depth in the sections that follow, is the benefits principle. Part I of this article introduces the primary weakness of the benefits principle: the reliance on source-based taxation for active income and residence-based taxation for passive income requires cooperation by too many jurisdictions. This section provides three case studies of individual tax evasion and corporate tax avoidance to illustrate the principle's shortcomings. Part II focuses on the individual tax evasion problem. This section analyses the FATCA, IGA, and MAATM responses and explains why these measures are likely to fall short. Part III focuses on corporate tax avoidance. This section examines the BEPS response and its inadequacies. Part IV proposes an alternative to international tax policy based on the benefits principle. This section argues that reversing the benefits principle by taxing passive income primarily at source and active income primarily at residence will more effectively reduce individual tax evasion and corporate tax avoidance in the developed and developing world

Citation source

In: Harvard Business Law Review. - Brooklyn. - Vol. 6 (2016), no. 2 ; p. 185-238

Geographic coverage

International

Language note

English