A Tax-Systems Perspective on Recent Global Tax Initiatives

Abstract

We present four important dimensions to international tax policy from a tax-systems perspective, stressing that non-rate/base tax policies can have different cross-jurisdictional spillover effects than changes in tax rates. The dimensions are the allocation of global income among taxing jurisdictions, information sharing between governments about taxpayers, multilateral efforts in tax policy and tax administration, and information sharing about governments’ tax practices. The paper discusses two recent global tax initiatives, the G20/OECD Automatic Exchange of Information (AEOI) and the Base Erosion and Profit Shifting (BEPS) Project in these four dimensions of tax systems in a cross-border context. As evidenced by these global initiatives using new types of tax-systems policy options, national tax systems and their policy and tax administration designs will also reflect more non-tax-rate/base issues. With increasing globalization and technological developments in economies, more tax policy and tax administration options will be needed in the future to deliver optimal tax policy. Effective use of tax-systems instruments can protect countries’ tax sovereignty in a world of increasing globalization.

Keywords: tax systems, automatic exchange of information, base erosion and profit shifting, tax avoidance, tax evasion, information sharing, tax-systems, AEOI, BEPS, OECD, G20, international tax

JEL Classification: D82, E61, F02, F23, F42, F53, F50, F55, F60, G18, G38, H25, H26, H30, H77, K33, K34, K42, M48