The Multilateral Tax Instrument: How to Avoid a Stalemate on Distributional Issues?

British Tax Review, 2016

24 Pages Posted: 11 Mar 2016 Last revised: 12 Mar 2016

See all articles by Dirk Broekhuijsen

Dirk Broekhuijsen

Leiden University - Leiden Law School

Henk Vording

Leiden University - Leiden Law School

Date Written: March 1, 2016

Abstract

Action 15 of the OECD/G-20 Base Erosion and Profit Shifting (BEPS) project is to “develop a multilateral instrument designed to provide an innovative approach to international tax matters”. The authors turn to two areas of academic thought to clarify the choices faced by states when engaging in either bilateral or multilateral tax treaties. One is the field of international relations, and especially the “neoliberal” approach based on the economic self-interest of states. The other is political philosophy, and especially Brennan and Buchanan’s “veil of uncertainty”. The authors argue that, as the economic gains of combating BEPS are uncertain, multilateral agreement will be easier to achieve on matters of design and concept, than on specific rules which have an uncertain distributive impact on states’ economies. The recommendations of the BEPS Final Report are, therefore, useful to the extent that they provide a starting point for reconsidering the architecture of international taxation, that is, for answering the question: “what would we want the taxation of multinational enterprise (MNE) profits to look like in 2025?”

Keywords: international taxation, BEPS, multilateralism, double tax treaties

Suggested Citation

Broekhuijsen, Dirk and Vording, Henk, The Multilateral Tax Instrument: How to Avoid a Stalemate on Distributional Issues? (March 1, 2016). British Tax Review, 2016, Available at SSRN: https://ssrn.com/abstract=2745229

Dirk Broekhuijsen (Contact Author)

Leiden University - Leiden Law School ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

Henk Vording

Leiden University - Leiden Law School ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

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