[PDF][PDF] Capital taxation and international Cooperation

L Ahrens, F Bothner, L Hakelberg… - Combating Fiscal Fraud …, 2021 - library.oapen.org
Combating Fiscal Fraud and Empowering Regulators, 2021library.oapen.org
Internationally mobile capital is hard to tax. Wealthy individuals can evade taxes by investing
in secretive tax havens and (illegally) failing to report their capital income to their home tax
administrations. Multinational corporations can avoid paying taxes by (legally) shifting their
(paper) profits to low tax countries. Public scandals such as the Panama Papers, Paradise
Papers, and Lux Leaks, combined with significant deficits in public budgets in the aftermath
of the financial crisis, have raised the political salience of these practices. Enjoying a …
Internationally mobile capital is hard to tax. Wealthy individuals can evade taxes by investing in secretive tax havens and (illegally) failing to report their capital income to their home tax administrations. Multinational corporations can avoid paying taxes by (legally) shifting their (paper) profits to low tax countries. Public scandals such as the Panama Papers, Paradise Papers, and Lux Leaks, combined with significant deficits in public budgets in the aftermath of the financial crisis, have raised the political salience of these practices. Enjoying a significant boost due to increased public pressure, the OECD, coordinating the international community’s actions against international tax flight since the 1960s,(re) launched two policy processes. First, it revived the OECD Harmful Tax Competition initiative, first launched in 1998 (OECD 1998) that aims at improved financial transparency to fight international tax evasion of (mostly personal) portfolio capital. Second, it launched a new policy process against ‘base erosion and profit shifting (BEPS)’in 2012 (OECD 2013) that aims at international tax avoidance by multinational corporations (MNC). The first policy process culminated in the adoption of automatic exchange of taxpayer information (AEI). In 2014, 51 countries adopted the so-called common reporting standard (CRS) by multilateral agreement (OECD 2014), and a further 58 have joined since, including all countries formerly notorious for their financial secrecy. ¹ This agreement was widely hailed as a breakthrough in the fight against international tax evasion (Christensen and Hearson 2019). According to most observers, however, the BEPS project has so
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