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Taxing Intellectual Property in the Global Economy: A Plea for Regulated and Internationally Coordinated Profit Splitting

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  • Wolfram F. Richter

Abstract

Inter-country equity in the taxation of IP is a contentious issue. With its BEPS initiative, the OECD aims at taxing in accordance with value creation even though there are admitted difficulties in determining the actual place of value creation. The European Commission promotes the introduction of unitary taxation. The proposal’s drawback is that it lacks incentive compatibility in information exchange. Furthermore, it stipulates a cost-dependent apportionment of the common consolidated corporate tax base that incentivizes locating R&D in low-tax countries. Against this background, this paper makes a case for an internationally regulated split of the profit earned with imported IP.

Suggested Citation

  • Wolfram F. Richter, 2017. "Taxing Intellectual Property in the Global Economy: A Plea for Regulated and Internationally Coordinated Profit Splitting," CESifo Working Paper Series 6564, CESifo.
    • Handle: RePEc:ces:ceswps:_6564
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    References listed on IDEAS

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    Cited by:

    1. Wolfram F. Richter, 2018. "Taxing Direct Sales of Digital Services: A Plea for Regulated and Internationally Coordinated Profit Splitting," CESifo Working Paper Series 7017, CESifo.

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    More about this item

    Keywords

    intellectual property; tax competition; profit split; formulary apportionment; Shapley value;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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