The Promise of Non-arm’s Length Practices: Is the Destination-Based Cash Flow Tax or Unitary Taxation the Panacea of Which Developing Countries Are in Search?

Abstract

The issues developing countries face when implementing the arm’s length standard are well known. As a result, the time seems opportune for an alternative paradigm. The unitary taxation system has received considerable attention and comment over the last few years as such an alternative. Some have heralded it as the answer to the many problems brought about by the arm’s length standard. Moreover, some suggest that the destination-based cash flow taxation system is the panacea to the present problems in international tax arising from the prevailing approach to the taxation of global affiliated companies. This article tests whether the destination-based cash flow tax and unitary taxation system continue to hold promise when applied in an African context.

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

“…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.…”