Global Firms, National Corporate Taxes: an Evolution of Incompatibility

Global Firms, National Corporate Taxes: an Evolution of Incompatibility
By:Shafik Hebous
Published on 2020-09-04 by

How did the rise of multinational enterprises (MNEs) put pressure on the prevailing international corporate tax framework? MNEs, and firms with market power, are not new phenomena, nor is the corporate income tax, which dates to the early 20th century.

This prompts the question, what is distinctly new (about multinational enterprises)--if anything--that has triggered unprecedented recent concerns about vulnerabilities in international tax arrangements and the taxation of MNEs? This paper presents a set of empirical observations and a synthesis of strands of the literature to answer this question.

A key message is that MNEs of the 21st century operate differently from prior periods and have evolved to become global firms--with important tax ramifications.

The fragility of international tax arrangements was present at the outset of designing international tax rules, but the challenges have drastically intensified with the global integration of business, the increased trade in hard-to-price services and intangibles, and the rapid growth of the digital economy.

This Book was ranked at 119 by Google Books for keyword International Taxes.

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Book which was published by since 2020-09-04 have ISBNs, ISBN 13 Code is 9781513556376 and ISBN 10 Code is 1513556371

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Excess Profit Taxes: Historical Perspective and Contemporary Relevance

Excess Profit Taxes: Historical Perspective and Contemporary Relevance
By:Mr. Shafik Hebous
Published on 2022-09-16 by International Monetary Fund

This paper discusses the design of excess profits taxes (EPTs) that gained renewed interest following the COVID-19 outbreak and the recent surge in energy prices.

EPTs can be designed as an efficient tax only falling on economic rent, like an allowance for corporate capital, and drawing some parallels with current proposals for reforming multinationals’ taxation.

EPTs can be permanent or temporary as an add-on to the corporate income tax to support revenue during an adverse shock episode.

The latter reflects experiences with EPTs during and after the World Wars.

Different from that era, though, profit shifting is now a challenge.

Estimation using firm-level data suggest that, at present, locations of excess profit across countries are consistent with profit shifting practices by multinationals.

Destination-based EPTs can address this concern.

Estimates suggest that a 10 percent EPT on the globally consolidated accounts of multinationals (on top of the current corporate income tax), with the EPT base being allocated using sales, raises global revenue by 16 percent of corporate income tax revenues.

The analysis suggests that international coordination would be desirable to mitigate the risks of profit shifting and tax competition.

Eventually, EPTs could mark an evolution of corporate taxation toward a non-distortionary rent tax.

This Book was ranked at 49 by Google Books for keyword Corporate Taxes.

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Book which was published by International Monetary Fund since 2022-09-16 have ISBNs, ISBN 13 Code is and ISBN 10 Code is 9798400221729

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