Ten Ways Developing Countries Can Take Control of their Own Tax Destinies

Mehta, Krishen; Siu, Erika Dayle

doi:10.1093/acprof:oso/9780198725343.003.0016

Cited by 5 publications

(4 citation statements)

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“…Globally, CSOs have mobilised in favour of more holistic approaches to taxing MNEs, and in particular for unitary taxation with formulary apportionment (ActionAid 2015;Oxfam 2000;Tax Justice Network 2020). They generally align with critical authors in academia that suggest developing countries might be better off with unilateral alternatives, such as safe harbours, the 'sixth method', unilateral apportionment schemes or sector-wide advanced pricing agreements (Ezenagu 2019;Mehta and Siu 2016;Picciotto 2018b). The question therefore is whether they mobilise in favour of these alternative approaches at the national level.…”

Section: Mobilisation Of Civil Societymentioning

confidence: 70%

“…However, critical authors in academia suggest that these countries might be better-off with alternative, simplified transfer pricing rules (Dean 2021;Picciotto and Dean 2012;Ezenagu 2019;Mehta and Siu 2016;Picciotto 2018b;Titus 2021;Waris 2013). The growing complexity inherent to the OECD transfer pricing guidelines creates a large administrative burden.…”

Section: Acknowledgementsmentioning

confidence: 99%

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Diffusion of OECD Transfer Pricing Regulations in Eastern Africa: Agency and Compliance in Governing Profit-Shifting Behaviour

Vet¹

2023

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Eastern African countries have codified transfer pricing regulations in their efforts to ring fence corporate tax revenue against profit shifting by multinational companies. Kenya (in 2006), Uganda (2011) and Rwanda (2020) used the dominant OECD transfer pricing guidelines as a template for reform. The wisdom of this approach for developing countries is contested in academic and civil society literature. According to this view, Western states largely dominate rule-setting procedures, and the costly enforcement of transfer pricing drains the scarce resources of revenue authorities. How can we reconcile the critical perspective in global debates with the roll-out of OECD type transfer pricing regimes on the ground? Case study evidence collected in these countries reveals that policymakers prefer anti-avoidance measures that are widespread and considered global practice. The widespread adoption of OECD transfer pricing norms worldwide gives them a unique compatibility advantage – this allows governments to adopt them as a way to raise public revenue, without compromising their attractiveness to investors. These network externalities are among the powerful lock-in effects that have cemented the position of the OECD guidelines in global tax governance. This study complements this narrative with a more bottom-up perspective. This highlights how domestic coalitions drive support for the OECD framework by mobilising both ideational and economic network effects. From this perspective the OECD rules are still an authoritative focal point for policymakers because interested social groups leverage concern about investor attractiveness. Ideational incentives shape bureaucratic policy advice to OECD standards. Civil society organisations, despite their critical stance towards the OECD guidelines at a global level, did not coalesce around a specific alternative – and instead raised the urgency of increasing public revenue.

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Section: Mobilisation Of Civil Societymentioning

confidence: 70%

Section: Acknowledgementsmentioning

confidence: 99%

Diffusion of OECD Transfer Pricing Regulations in Eastern Africa: Agency and Compliance in Governing Profit-Shifting Behaviour

Vet¹

2023

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“…More than a decade ago, Mick Moore (2004: 8) noted that 'taxation issues have been far less prominent on the public political agendas in the South than within the OECD'. Since then, international tax issues in general and tax avoidance and evasion in particular have emerged onto the development agenda (Durst 2010; Mehta and Siu 2016). The IMF has recently started to catch up with these developments.…”

Section: Discussionmentioning

confidence: 99%

Policy diffusion within international organizations: A bottom-up analysis of International Monetary Fund tax work in Panama, Seychelles, and the Netherlands

Ylönen

2017

WIDER Working Paper

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I analyse the evolution of the International Monetary Fund tax policy advice in three countries commonly used for tax evasion or avoidance: Panama, Seychelles, and the Netherlands. A review of loan agreements and Country Reports covering 1999 to 2017 highlights the dependence of the Fund's country teams on external assessments produced by the Fund's other departments and smaller international organizations. Insofar as the Fund has paid attention to international tax flight, its focus has largely been on individual-level tax evasion instead of corporate tax avoidance. The responses have been inconsistent, with the tax haven regime of Seychelles getting much more attention than Panama and the Netherlands.

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“…As many authors have shown (e.g. Picciotto 1992, Overesch 2006, Sikka and Willmott 2010, Jenkins and Newell 2013, Keuschnigg and Devereux 2013, Genschel and Rixen 2014, Durst 2016, Fichtner 2016, Mehta and Siu 2016, tax authorities face enormous challenges in monitoring intra-firm trade and enforcing domestic tax laws. It is thus not surprising that aggressive tax avoidance has been highlighted as a key issue in much of the academic research on the intra-firm trade (see, e.g.…”

Section: Introductionmentioning

confidence: 99%

Politics of Intra-firm Trade: Corporate Price Planning and the Double Role of the Arm’s Length Principle

Ylönen

Teivainen

2017

New Political Economy

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Intra-firm trade is an emerging issue. One of its key elements is the international shifting of profits, for example, through transfer pricing that big enterprises use to cross-subsidise their subsidiaries, often to avoid taxes. Accounting rules conceal much of the information about transfer pricing, reproducing secrecy and facilitating the use of administered prices. Given the prevalence of administered price setting, a significant amount of international trade cannot be meaningfully analysed as market transactions. This provokes questions about the validity of market assumptions in research on trade in particular and global capitalism more generally. Our specific contribution focuses on the role of the arm's length principle and the significance of cross-subsidisation and other forms of corporate planning in intra-firm trade. Under certain conditions, price planning by private corporations should be analysed as political rule within the economic sphere. Since the politics of the world economy is not merely related to governmental intervention, corporations should also be theorised as potentially political entities. Crossing the disciplinary boundaries between political economy and normative political theory, we suggest that the politicisation of intra-firm trade opens possibilities for creating more effective responses to price administration and for creating more democratic ways of governing the global economy.ARTICLE HISTORY

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Ten Ways Developing Countries Can Take Control of their Own Tax Destinies

Cited by 5 publications

References 0 publications

Diffusion of OECD Transfer Pricing Regulations in Eastern Africa: Agency and Compliance in Governing Profit-Shifting Behaviour

Diffusion of OECD Transfer Pricing Regulations in Eastern Africa: Agency and Compliance in Governing Profit-Shifting Behaviour

Policy diffusion within international organizations: A bottom-up analysis of International Monetary Fund tax work in Panama, Seychelles, and the Netherlands

Politics of Intra-firm Trade: Corporate Price Planning and the Double Role of the Arm’s Length Principle

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