The Skill-Based Inequality in International Taxation: Comparative Evaluation of Tax Treaties Concluded by Former-USSR States with Nordic and with Investment Hub States

13 Pages Posted: 10 Sep 2020

Date Written: September 8, 2020

Abstract

In the research the results of the comparative quantitative evaluation of the effects of tax treaties on the FDIs are presented for the six former-USSR states: three non-EU – Russia, Ukraine, Belarus and three EU members – Lithuania, Latvia and Estonia. The different level of fiscal risks and distortions of equality can arise in the case of application of the almost identically open treaties with the Nordic and with the investment hub states. While too open treaties with the investment hubs can lead to massive round-tripping and treaty shopping, similar treaties with the Nordic states do not lead to similar problems. Evaluation of fiscal risks arising from tax treaty potential to become conduit treaty is crucial for the successful tax policy and for certainty of the investment climate. The divide in technical skill capacity of treaty negotiators, tax and revenue offices between the former-USSR states and the developed states is suggested as a key reason for the incorrect evaluation of such fiscal risks at a time of treaty negotiations.

Keywords: Tax policy, Withholding tax, Tax treaty, Investment hub, Transitional economy, Nordic states, Baltic states, former-USSR, FDI, inequality

JEL Classification: K34, H20, H71, P20

Suggested Citation

Milogolov, Nikolai, The Skill-Based Inequality in International Taxation: Comparative Evaluation of Tax Treaties Concluded by Former-USSR States with Nordic and with Investment Hub States (September 8, 2020). Copenhagen Business School, CBS LAW Research Paper No. 20-25, Available at SSRN: https://ssrn.com/abstract=3688855

Nikolai Milogolov (Contact Author)

Financial Research Institute ( email )

Nastasyinsky Lane, 3, p. 2
Moscow, 127006
Russia

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