International Tax Planning in the Era of ICT

Abstract

The aim of this chapter is to analyse the impact of the increase in the use of ICT on international tax planning opportunities under the current tax law. Thus, the relevant tax fields in the age of ICT can be compiled. To achieve this aim, this chapter is organised as follows: To begin with, the basic international tax planning theories are outlined. The company’s fiscal aim to reduce the overall effective tax rate is illustrated here in more detail and the most important means for achieving this objective, such as making use of the international differences in tax rates, are defined. Next, several tax planning instruments are analysed to determine whether there are new opportunities for minimising the effective tax rate and to what extent new risks arise with the use of ICT. The analysis includes instruments such as the location of a company’s residence, the allocation of functions and risks, the implementation of an optimal transfer pricing system, the choice of form and location of investments abroad, and the use of hybrid forms of co-operation. For each instrument, current and non-current tax issues are considered. Based on the identification of the relevant changes in the international tax planning of companies, we then move on to analyse the effects of the changed business patterns of multinational companies on the allocation of tax revenues between different countries.