International Tax Law as a Ponzi Scheme

Abstract

This paper explores the extent to which international tax law is more than the sum of its parts. It does so by examining three recent legal/policy decisions. The 2006 judgement of the Tax Court of Canada in MIL Investments decided that a statutory general anti-avoidance rule of interpretation does not operate to bar the practice of treaty shopping for corporate residence; the 2008 judgement of the United States Tax Court in Jameison determined that the alternative minimum tax credit limitation trumps the Canada-United States tax treaty foreign tax credit as the last-in-time enactment; and the Internationally Agreed Tax Standards issued by the OECD seek to implement a coordinated international standard for tax reporting. These decisions demonstrate that although tax treaty networks and a centralized OECD structure have been put in place, the interpretation and application of these instruments reflect much international law thinking in that they invariably circle back to unilateral state policy.