Reimagining Global Tax Governance: A Two-sided Platform Perspective

Abstract

The international tax regime (ITR) faces an existential challenge in the early 21st century. There are reasons to argue that the world economy is dealing with a trilemma: liberal democracy, national self-determination, and deep economic globalization cannot coexist because they are now incompatible. So, a central question is whether the ITR global governance structure may be adapted to solve the trilemma and make the ITR more responsive to people's evolving needs and values worldwide.

This chapter proposes a new global tax governance model designed to address the trilemma in the ITR. This model has been developed to meet the eight tests outlined by the UN General Assembly in 2023 for governing the framework convention on international tax cooperation and to ensure compatibility with the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.

The proposal is shaped as two concentric circles, symbolizing an ecosystem with both top-down and bottom-up elements. The top-down element operates like a bicameral legislature for standardization agreements under the United Nations' control. It is based on the concept of standardization agreements as defined in EU and US antitrust law and World Trade Organization law as default rules. The bottom-up element draws inspiration from the Paris Agreement on Climate Change and functions as a pledge and review system.

The proposal aims to achieve institutional integration in the ITR by promoting clustering, repeated games, and logrolling involving all stakeholders. It also aims to ensure a fair balance of competing interests, decision-making balancing consensus and voting, and independent outcome feedback. The proposed two-concentric circle ecosystem is intended to function as the UN agora for the global North and South in international taxation. The theoretical framework is based on a two-sided platform perspective, encompassing antitrust and international law concepts.