IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/8322.html
   My bibliography  Save this paper

The institutional Design of international double Taxation Avoidance

Author

Listed:
  • Rixen, Thomas

Abstract

This article analyzes the institutional design of international double tax avoidance. The basic argument is that double tax avoidance exhibits the strategic structure of a coordination game with a distributive conflict. The distribution of tax revenues depends on the asymmetry of investment flows between treaty partners. Since investment flows are defined dyadically, bilateral bargaining can best accommodate countries’ concern for the distribution of tax revenues and other economic benefits connected to the tax base. Moreover, because there are no serious externality problems with bilateral agreement, this solution is also viable. At the same time, there is a need for a multilateral organization to disseminate information and shared practices in the form of a model convention that provides a focal point for bilateral negotiations. The strategic structure of a coordination game can also explain why the institutions of double tax avoidance do not have to be equipped with third-party enforcement capabilities. Instead, the Mutual Agreement Procedure (MAP) is interpreted as a device to deal with the fact that double tax agreements (DTAs) are incomplete contracts.

Suggested Citation

  • Rixen, Thomas, 2008. "The institutional Design of international double Taxation Avoidance," MPRA Paper 8322, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8322
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/8322/1/MPRA_paper_8322.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chisik, Richard & Davies, Ronald B., 2004. "Asymmetric FDI and tax-treaty bargaining: theory and evidence," Journal of Public Economics, Elsevier, vol. 88(6), pages 1119-1148, June.
    2. Ronald B. Davies, 2004. "Tax Treaties and Foreign Direct Investment: Potential versus Performance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(6), pages 775-802, November.
    3. Sinn, H.W., 1990. "Taxation And The Birth Of Foreign Subsidiaries," Papers 66, Princeton, Woodrow Wilson School - Discussion Paper.
    4. Drezner, Daniel W., 2000. "Bargaining, Enforcement, and Multilateral Sanctions: When Is Cooperation Counterproductive?," International Organization, Cambridge University Press, vol. 54(01), pages 73-102, December.
    5. McIntyre, Michael J., 1993. "Guidelines for Taxing International Capital Flows: The Legal Perspective," National Tax Journal, National Tax Association, vol. 46(3), pages 315-21, September.
    6. John Whalley, 2001. "Puzzles Over International Taxation of Cross Border Flows of Capital Income," NBER Working Papers 8662, National Bureau of Economic Research, Inc.
    7. repec:cup:apsrev:v:79:y:1985:i:04:p:923-942_23 is not listed on IDEAS
    8. Rixen, Thomas, 2008. "The institutional design of international double taxation avoidance
      [Das Design der internationalen Institutionen zur Vermeidung von Doppelbesteuerung]
      ," Discussion Papers, Research Unit: Global Governance SP IV 2008-302, Social Science Research Center Berlin (WZB).
    9. McIntyre, Michael J., 1993. "Guidelines for Taxing International Capital Flows: The Legal Perspective," National Tax Journal, National Tax Association, vol. 46(3), pages 315-321, September.
    10. Abbott, Kenneth W. & Snidal, Duncan, 2000. "Hard and Soft Law in International Governance," International Organization, Cambridge University Press, vol. 54(03), pages 421-456, June.
    11. Hartman, David G., 1985. "Tax policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 26(1), pages 107-121, February.
    12. Koremenos, Barbara & Lipson, Charles & Snidal, Duncan, 2001. "The Rational Design of International Institutions," International Organization, Cambridge University Press, vol. 55(04), pages 761-799, September.
    13. David G. Hartman, 1982. "Tax Policy and Foreign Direct Investment in the United States," NBER Working Papers 0967, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rixen, Thomas, 2008. "The institutional design of international double taxation avoidance
      [Das Design der internationalen Institutionen zur Vermeidung von Doppelbesteuerung]
      ," Discussion Papers, Research Unit: Global Governance SP IV 2008-302, Social Science Research Center Berlin (WZB).

    More about this item

    Keywords

    Double Taxation; Rational Institutional Design; International Political Economy;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8322. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.