British Tax Review, No. 5, pp. 383-403, 1997
23 Pages Posted: 13 May 2010 Last revised: 14 Apr 2015
Date Written: 1997
“Ectopia” is a label given here to a feature of tax law that distinguishes it from most other forms of law. Income tax law is dislocated from the facts to which it relates. This dislocation leaves a gap, or “ectopia” between tax laws and the economic facts of the transactions or structures to which it relates. The ectopia of income tax law is pathological, serious and incurable, although governments strive to alleviate the problems to which the conditions give rise.
Problems that result from the ectopia of tax law or generally acute and particularly resistant to cure. The reason is that income tax taxes gains, but not all gains. Thus, there must be a concept of income. The concept of income cannot be defined by law because it is not something that exists as a physical fact or as an abstract thought like most other characteristics in law. What makes “income” fictional are the factors of space, such as geograhpical limits imposed by states, and time, which attempts to divide indefinite steams of profits into year long blocks, a process that underlies the essential irrationality of the capital/revenue distinction. Tax systems struggle to find ways of coping with the consequences of these fictions. This struggle results in problems with, inter alia, double taxation, withholding taxes, transfer pricing, and with controlled foreign companies.
Keywords: Income Tax, Income Tax Act 1994, Ectopia, International Taxation, Double Taxation, Jurisdiction, Timing, Tax Accounting Fictions
JEL Classification: K33, K34
Suggested Citation: Suggested Citation
Prebble QC, John, Ectopia, Tax Law and International Taxation (1997). British Tax Review, No. 5, pp. 383-403, 1997; Victoria University of Wellington Legal Research Paper No. 28/2011. Available at SSRN: https://ssrn.com/abstract=1604875