BEPS, tax sovereignty and global justice

Abstract

The base erosion and profit shifting (BEPS) initiative of the Organisation for Economic Cooperation and Development (OECD) and G20 countries marks an important development in the reform of the international taxation regime. In this paper I argue that the initiative nevertheless fails to provide a coherent account of what global justice requires in the realm of fiscal policy. While the OECD's ostensible aim to increase and protect the tax sovereignty of states is commendable, there is insufficient attention for the distribution of relative tax sovereignty. I show that current global income inequality is correlated with significant inequality of tax sovereignty, that this inequality is unjust on a plausible conception of what global justice requires, and that the BEPS initiative is unlikely to meaningfully address this injustice. I close by suggesting that an internationalist conception of justice concerned with securing the tax sovereignty of independent polities may need to prescribe the creation of globally redistributive institutions.

The Political Economy of ‘Tax Spillover’: A New Multilateral Framework

“…In this respect, tax competition policies pursued by governments can potentially threaten other states’ capacity for fiscal self‐determination, by eroding their pool of resources for redistributive purposes. Protection of fiscal self‐determination, therefore requires going beyond BEPS, to at least include some regulation of the tax rates set by states (Van Apeldoorn, ), or as we suggest, identifying and disincentivising policies that pose pronounced spillover threats to other countries’ tax bases, as the practical element of a new international moral harm convention.…”

“…Spillover effects were also found to go well beyond tax revenues, to include macroeconomic performance and the broader level and distribution of welfare across nations (IMF, ). In this respect, tax spillovers can be conceived of as a potential threat to national sovereignty, eroding tax bases and impeding ‘fiscal self‐determination’, or the ability to achieve policy goals through legislative programmes (Dietsch, ; Van Apeldoorn, ).…”

“…Just as important are the tax policies and administrative practices relating to the setting and collection of taxes by governments. As others have noted the BEPS initiative falls short of protecting states from threats to their fiscal self‐determination that may result from tax competition (Devereux and Vella, ; Van Apeldoorn, ). For example in 2013, UK Prime Minister, David Cameron hosted the G8 summit, heralding a new OECD focus on AIE and CbCR as the start of a tough new international regime on tax avoidance and evasion.…”

International tax competition and justice: The case for global minimum tax rates

“…Much like cosmopolitans disagree about the preferred distributive pattern among individuals, so internationalists could defend different principles for a just distribution of effective fiscal self-determination among states (van Apeldoorn, 2018). They could be sufficientarians (each jurisdiction should enjoy a certain minimum level of effective selfdetermination) or strict egalitarians (equal self-determination for all), they could be concerned with raising the effective self-determination of the worst off jurisdiction, or they could be sum-maximizers (endorsing the view that we should maximize the total amount of effective fiscal self-determination enjoyed by all states).…”

Anti-Avoidance and Profit Shifting in Asean Multinational Enterprises: Is It Effective?

“…In setting the tax rate, the country considers the rate that in line with its economic policy, sometimes by sacrificing tax revenue (Compact, 2013). For example, the rate is set low enough to attract Foreign Direct Investment (FDI) (van Apeldoorn, 2018). That is why the tax rates in each country vary.…”