Double Taxation
What are the two main problems addressed by international tax regimes?
Double taxation and under-taxation
What phenomenon describes countries lowering taxes to attract capital?
Tax competition
What is the term for adding new institutions on top of old ones?
Layering building new frameworks without dismantling old ones
Which organization replaced the League of Nations in tax matters?
The OECD
What dilemma describes the structure of tax competition?
An asymmetric prisoner’s dilemma, where small states gain from undercutting and big states suffer.
What is the benefit principle in source taxation?
It holds that the source country provides public goods enabling profit generation, so it should be entitled to tax the income earned
Why do small countries resist curbing tax competition?
They gain more from importing capital via low taxes than they lose from undercutting, so they oppose cooperative tax regulation
What institutional change involves repurposing existing rules?
Conversion: old institutions are used for new purposes under external pressure
What project did the OECD launch in 1996 to curb harmful practices?
The Project on Harmful Tax Practices, aimed at reforming tax havens and preferential regimes.
What are two key societal groups influencing tax policy?
Corporate capital and individual capital are influential, labour plays a smaller role
What are the two methods used to avoid double taxation?
The exemption method and the foreign tax credit method
What term refers to booking profits in low-tax jurisdictions without real activity?
Virtual tax competition or shifting paper profits to tax havens
What concept refers to modifying rules without formally changing them?
Rule stretching, where actors adapt interpretation without rewriting the law
What is the Model Convention used for?
It serves as a template for negotiating bilateral double tax treaties
What type of institutional setup creates undertaxation as a side effect?
A sovereignty-preserving system, which enables tax arbitrage by multinational enterprises.