Reconstructing the International Tax System

Free Download Reconstructing the International Tax System: An Alternative to Pillar One
English | 2025 | ISBN: 3031839323 | 162 Pages | PDF EPUB (True) | 2.4 MB
Source-based taxation and the arm's length standard have been foundational elements of the international tax system for many decades. With the advent of the highly digitalized platform firm, the OECD and many other stakeholders assert that these principles have been rendered obsolete. In their stead, these stakeholders have proposed an alternative hybrid international tax system. Under this proposed hybrid system, the long-standing profit allocation rules would be applied in the first instance to determine the preliminary attribution of in-scope multinational firms' taxable income to individual taxing jurisdictions. These results would then be subject to a secondary reallocation designed to ensure that a portion of such firms' taxable income is attributed to, and taxable by, jurisdictions in which consumers and users reside ("market jurisdictions"). This secondary allocation - the core of the OECD's Pillar One and an essential element of its two-pronged "Pillar One-Pillar Two Solution" - explicitly deviates from both the arm's length standard and the principle of source-based taxation.