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Is the International Tax System Fit for Purpose, Especially for Developing Countries?

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posted on 2024-09-06, 05:47 authored by Sol Picciotto
Taxes are a basis of national states, but they have been internationally coordinated since the emergence of taxes on income and profits, which were central to the legitimacy of taxation and the increased power of states in the 20th century. This paper traces the historical development of this international system, especially in relation to its interaction with the growth of transnational corporations (TNCs), and analyses attempts to adapt the system to the increasingly dominant role of TNCs in the world economy. It explains and discusses the key principles and concepts (permanent establishment, arm’s length, controlled foreign corporations, transfer pricing), and shows that they have become increasingly inadequate especially following recent renewed economic globalisation. Contributing to current debates on reform of the system, this paper puts forward proposals for an evolutionary shift towards a unitary approach for taxing TNCs.

international tax, transnational corporations, unitary taxation

Funding

DfID, NORAD

History

Publisher

Institute of Development Studies

Citation

Picciotto, S. (2013) Is the International Tax System Fit for Purpose, Especially for Developing Countries? ICTD Working Paper 13. Brighton: IDS.

Series

ICTD Working Paper 13

IDS Item Types

IDS Working Paper

Copyright holder

Institute of Development Studies

Language

en

Identifier ISBN

978-1-78118-136-2

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    International Centre for Tax and Development

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