Taxing Profit in a Global Economy

ISBN : 9780198808060

Michael P. Devereux; Alan J. Auerbach; Michael Keen; Paul Oosterhuis; Wolfgang Schoen; John Vella
416 ページ
156 x 234 mm

The international tax system is in dire need of reform. It allows multinational companies to shift profits to low tax jurisdictions and thus reduce their global effective tax rates. A major international project, launched in 2013, aimed to fix the system, but failed to seriously analyse the fundamental aims and rationales for the taxation of multinationals' profit, and in particular where profit should be taxed. As this project nears its completion, it is becoming increasingly clear that the fundamental structural weaknesses in the system will remain. This book, produced by a group of economists and lawyers, adopts a different approach and starts from first principles in order to generate an international tax system fit for the 21st century. This approach examines fundamental issues of principle and practice in the taxation of business profit and the allocation of taxing rights over such profit amongst countries, paying attention to the interests and circumstances of advanced and developing countries. Once this conceptual framework is developed, the book evaluates the existing system and potential reform options against it. A number of reform options are considered, ranging from those requiring marginal change to radically different systems. Some options have been discussed widely. Others, particularly Residual Profit Split systems and a Destination Based Cash-Flow Tax, are more innovative and have been developed at some length and in depth for the first time in this book. Their common feature is that they assign taxing rights partly/fully to the location of relatively immobile factors: shareholders or consumers. Stepping back from current political debates on combatting profit shifting and how taxing rights over the profits of the digitalized economy should be allocated, this book undertakes a fundamental review of the existing international system of taxing business profit. It argues that the existing system is fundamentally flawed, and that there is a need for radical reform.


1 Introduction
2 Key issues in taxing profit
3 The current international tax system
4 Fundamental reform options
5 Basic choices in considering reform
6 Residual profit allocation by income
7 Destination-based cash flow taxation


Michael P. Devereux is Professor of Business Taxation and Director of the Oxford University Centre for Business Taxation.; Alan J. Auerbach is the Robert D. Burch Professor of Economics and Law at the University of California, Berkeley. ; Michael Keen is Deputy Director of the Fiscal Affairs Department of the International Monetary Fund. ; Paul Oosterhuis is Senior International Tax Partner at Skadden, Arps, Slate, Meagher and Flom. ; Wolfgang Schon is Managing Director of the Max Planck Institute for Tax Law and Public Finance. ; John Vella is Associate Professor and Senior Research Fellow at the Oxford University Centre of Business Taxation.