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Journal of International Business Studies

, Volume 50, Issue 9, pp 1656–1667 | Cite as

The rise of the digital economy: Rethinking the taxation of multinational enterprises

  • Antony Ting
  • Sidney J. GrayEmail author
Counterpoint

Abstract

The international tax regime in relation to multinational enterprises (MNEs) is ineffective and a rethink is required. We illustrate that the tax avoidance motive of MNEs can incentivize managers to locate profits in low-tax jurisdictions without affecting the locations of their real operations. We also argue that proposals to tax shareholders and consumers rather than corporate profits face significant theoretical and practical obstacles. Finally, we extend a recently proposed model to tax MNEs using a sales-based allocation of consolidated worldwide profits. This aims to prevent MNEs shifting profits to low-tax jurisdictions and reduces incentives for tax competition between countries.

Keywords

digital economy multinational enterprises taxation value chain tax avoidance tax reform 

Résumé

Le régime fiscal international applicable aux entreprises multinationales (EMN) est inefficace et doit être repensé. Nous démontrons que le motif d’évitement fiscal des EMN peut inciter les dirigeants à localiser les bénéfices dans des pays à faible fiscalité sans affecter les localisations de leurs opérations réelles. Nous considérons également que les propositions visant à taxer les actionnaires et les consommateurs plutôt que les bénéfices des entreprises se heurtent à des obstacles théoriques et pratiques importants. Enfin, nous développons un modèle récemment proposé sur l’imposition des EMN en utilisant une répartition des bénéfices mondiaux consolidés fondée sur le chiffre d’affaires. L’objectif est d’empêcher les EMN de transférer leurs bénéfices vers des juridictions à faible fiscalité et de réduire les incitations à la concurrence fiscale entre les pays.

Resumen

El régimen fiscal internacional en relación con empresas multinacionales (EMN) es ineficaz y es necesario repensarlo. Ilustramos que el motivo de la evasión de impuestos de las EMN puede incentivar a los gerentes a ubicar las ganancias en jurisdicciones de impuestos bajos sin afectar la ubicación de las operaciones reales. También argumentamos que las propuestas para gravar a los accionistas y a los consumidores en lugar de las ganancias corporativas enfrentan obstáculos teóricos y prácticos significativos. Finalmente, extendemos un modelo propuesto recientemente para gravar EMN usando una asignación de las ventas de las ganancial consolidadas mundialmente. Esto tiene el objetivo que las empresas multinacionales trasladen las ganancias a jurisdicciones de bajos impuestos y reduce incentivos para la competencia fiscal entre los países.

Resumo

O regime fiscal internacional em relação às empresas multinacionais (MNEs) é ineficaz e é necessário repensá-lo. Ilustramos que o motivo de evasão fiscal de MNEs pode incentivar gerentes a direcionar lucros em jurisdições com baixa tributação sem afetar a localização de suas operações reais. Também argumentamos que as propostas para taxar acionistas e consumidores em vez de lucros corporativos enfrentam obstáculos teóricos e práticos significativos. Finalmente, estendemos um modelo recentemente proposto para tributar MNEs usando uma alocação baseada em vendas de lucros consolidados mundialmente. O objetivo é evitar que MNEs mudem seus lucros para jurisdições com baixa tributação e reduzir incentivos à concorrência fiscal entre países.

摘要

与跨国公司(MNEs)相关的国际税务制度不起作用, 需重新思考。我们显示, 跨国公司的避税动机可以激励管理者在低税管辖区内落实利润而不影响其实际运营位置。我们还认为, 向股东和消费者而不是企业利润征税的建议面临重大的理论和实践障碍。最后, 我们使用基于销售的全球综合利润分配, 将最近提出的模型扩展到对跨国公司征税。这旨在防止跨国公司将利润转移到低税管辖区, 并减少各国之间税收竞争的激励。

Notes

ACKNOWLEDGEMENTS

We thank Alain Verbeke (Editor-in-Chief), Gary Biddle (Area Editor), and an anonymous reviewer for their advice and helpful comments.

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Copyright information

© Academy of International Business 2019

Authors and Affiliations

  1. 1.Business SchoolThe University of SydneySydneyAustralia

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