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Fight against Tax Havens and International Tax Law —New Taxing Right and a Global Minimum Tax—

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  • Naoki Oka

    (Tokyo Foundation for Policy Research, Certified Public Tax Accountant)

Abstract

Global corporate tax revenue is vanishing due to the shifting of profits to tax havens. Under the current principles of international taxation, taxable income of each member of multinational enterprises (MNEs) is calculated on the assumption that individual companies are engaged in business transactions as a separate company dealing at an arm’s length (principle of separate accounting). However, MNEs can easily reduce their group tax burden by booking intangible assets that generate a significant amount of profits (assumed to be excess profits) on the books of group companies in tax haven countries granting low tax rates. This paper pays attention to the fact that a package of solutions worked out by the international community in January 2020 has boldly adopted the taxation of consolidated group income and a global minimum tax for income taxation of MNEs, and explores the meaning of the package under international taxation law. Will the package be effective in restraining “a race to the bottom” (Tax competition and corporate tax rates reduction)?

Suggested Citation

  • Naoki Oka, 2021. "Fight against Tax Havens and International Tax Law —New Taxing Right and a Global Minimum Tax—," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 17(1), pages 1-41, January.
    • Handle: RePEc:mof:journl:ppr17_01_04
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    File URL: https://www.mof.go.jp/english/pri/publication/pp_review/ppr17_01_04.pdf
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    References listed on IDEAS

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    1. Reuven Avi-Yonah, "undated". "International Tax as International Law," University of Michigan John M. Olin Center for Law & Economics Working Paper Series umichlwps-1006, University of Michigan John M. Olin Center for Law & Economics.
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    More about this item

    Keywords

    international taxation; BEPS; tax avoidance; tax haven; multinational enterprise; intangible assets; OECD;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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