Tax Competition and the Trend toward Territoriality

3 Pages Posted: 19 Dec 2012 Last revised: 7 Jan 2013

Date Written: December 18, 2012


Tax competition is with us to stay, and the drive toward territorial taxation of multinationals will continue. Ultimately, it makes sense to tax corporations on a source basis because corporate residence is not very meaningful. But if the correct reforms to CFC rules are undertaken together with enhanced transfer pricing enforcement (e.g., by combining the arm's length standard with formulary solutions, as I have suggested elsewhere), such trends are not necessarily harmful to maintaining a stable corporate tax base.

Keywords: tax competition, territoriality

JEL Classification: H25, K34

Suggested Citation

Avi-Yonah, Reuven S., Tax Competition and the Trend toward Territoriality (December 18, 2012). U of Michigan Public Law Research Paper No. 297, Available at SSRN: or

Reuven S. Avi-Yonah (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

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