Revisiting Global Formulary Apportionment

52 Pages Posted: 29 May 2010 Last revised: 14 Nov 2012

See all articles by Susan C. Morse

Susan C. Morse

University of Texas at Austin - School of Law

Date Written: May 28, 2010


This Article examines global destination sales-based formulary apportionment (“DSFA”). It questions whether unilateral U.S. adoption of a DSFA tax would prompt other countries to follow suit, identifying on one hand factors that could encourage a productive capacity shift to the DSFA-adopting jurisdiction and on the other hand origin-based incentives such as business-to-business sales that could encourage the movement of capital investment to jurisdictions other than the adopting jurisdiction. It also analyzes several points of comparison between a globally adopted DSFA tax and the existing separate accounting corporate tax system. These include the potential of transfer pricing and other reform efforts to improve the current system baseline; the continued economic dislocation costs of origin-based and cross-border merger incentives under global DSFA; the costs of global negotiation, compliance and administration; and the limitations of a norm of international corporate taxation for the future evolution of the U.S. corporate income tax. As I plan to explore in future work, the uncertainty and inflexibility of outcomes resulting from broad global reform efforts suggests that incremental measures – which could include formulary and cooperative elements – may provide a better approach to international corporate income tax reform.

Suggested Citation

Morse, Susan C., Revisiting Global Formulary Apportionment (May 28, 2010). Virginia Tax Review, Vol. 29, p. 593, 2010, Available at SSRN:

Susan C. Morse (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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