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Tax treaties and the allocation of taxing rights with developing countries

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  • PAOLINI, Dimitri

    (Università di Sassari, CRENoS and DEIR; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; University of Luxembourg, CREA, Luxembourg)

  • PISTONE, Pasquale

    (University of Salerno and WU Vienna)

  • pulina, GIUSEPPE

    (Università di Cagliari and Sassari, CRENoS and DEIR)

  • ZAGLER, Martin

    (WU Vienna University of Economic and Business)

Abstract

Global income taxation in the country of residence is a legal dogma of international taxation. We question this dogma from the perspective of relations with developing countries from a legal and economic perspective, and make a modern and fair proposal for tax treaties. We will show under which conditions a developing and a developed country will voluntarily sign a tax treaty where information is exchanged truthfully and whether they should share revenues. Moreover, we will demonstrate how the conclusion of a tax treaty can assist in the implementation of a tax audit system.

Suggested Citation

  • PAOLINI, Dimitri & PISTONE, Pasquale & pulina, GIUSEPPE & ZAGLER, Martin, 2011. "Tax treaties and the allocation of taxing rights with developing countries," LIDAM Discussion Papers CORE 2011042, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2011042
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    References listed on IDEAS

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    Cited by:

    1. Pranvera Shehaj & Martin Zagler, 2025. "Asymmetric Double Tax Treaties: Relief Method and Tax Sparing for Foreign Direct Investment in Developing Countries," Public Finance Review, , vol. 53(1), pages 94-135, January.
    2. Hearson, Martin, 2018. "When do developing countries negotiate away their corporate tax base?," LSE Research Online Documents on Economics 87762, London School of Economics and Political Science, LSE Library.
    3. Julia Braun & Martin Zagler, 2018. "The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements," The World Economy, Wiley Blackwell, vol. 41(6), pages 1478-1507, June.
    4. Petr Janský & Jan Láznička & Miroslav Palanský, 2021. "Tax treaties worldwide: Estimating elasticities and revenue foregone," Review of International Economics, Wiley Blackwell, vol. 29(2), pages 359-401, May.
    5. Hearson, Martin, 2018. "Transnational expertise and the expansion of the international tax regime: imposing ‘acceptable’ standards," LSE Research Online Documents on Economics 88351, London School of Economics and Political Science, LSE Library.
    6. Erokhin, Dmitry & Zagler, Martin, 2024. "Who will sign a double tax treaty next? A prediction based on economic determinants and machine learning algorithms," Economic Modelling, Elsevier, vol. 139(C).

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    More about this item

    Keywords

    international corporate income taxation; tax treaties; revenue sharing; asymmetric information; uncertainty; locational decisions; principal-agent models;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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