The Future of Corporate Residency

33 Pages Posted: 4 Oct 2017 Last revised: 16 Aug 2018

Date Written: September 29, 2017


Globalization and tax competition challenge residence base taxation of corporations, by pushing states to offer competitive “deals” in order to attract corporate-residents. This paper will describe this process and ask whether states could regain their power to tax corporations on a residence-basis through multilateral cooperation. It will argue that the history of cooperation on international tax among states raises some serious doubts, not only regarding the attainability and sustainability of such cooperation, but also regarding its desirability.

The paper will start with a very brief review of the process of corporations gaining independence from the state turning them from chartered organizations reigned by the political institutions of the state into independent market actors. It will then consider the seemingly inverse process of the rationale for income taxation shifting from a market based logic of benefit taxation to a political rationale of taxation based on membership in (and commitment to) a political community. Both these processes burden the ability of states to benefit from the profits of corporations. Globalization and tax competition, the paper goes on to argue, present further challenges for the taxation of corporations. Tax competition not only marketizes the relationships between states and their corporate-taxpayers, but also fragmentizes it — allowing taxpayers to pick and choose among various features of the different jurisdictions, thus seriously undermining the ability of states to collect taxes from such MNEs. The paper will conclude by discussing whether cooperation among states could offer a solution, arguing that such cooperation is not only extremely hard to attain and sustain, but also not necessarily desirable.

Suggested Citation

Dagan, Tsilly, The Future of Corporate Residency (September 29, 2017). Bar Ilan University Faculty of Law Research Paper No. 18-14. Available at SSRN: or

Tsilly Dagan (Contact Author)

Bar Ilan University ( email )

Ramat Gan
Ramat Gan, 52900

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