Tax Co-Ordination: Crossing the Rubicon?
ER ZAL GEHEVEN WORDEN!, OPSTELLEN AANGEBODEN AAN PROF. DR. S. CNOSSEN, D.A. Albregtse, A.L. Bovenberg, L.G.M. Stevens, eds., pp. 335-345, Deventer: Kluwer, 2001
8 Pages Posted: 19 Jul 2009
Date Written: 2001
In this contribution, we take a closer look at the process of international tax co-ordination which has gained momentum over the last few years. In this process, different areas have been discussed, such as corporate income taxation, taxation of savings, taxation of ecommerce, and measures against tax havens. Considerable progress has been made both in terms of subjects discussed and intensity of discussions. On the other hand, discussion results are rarely appealing to the general public. For those who were used to think of tax coordination in terms of minimum tax rates and tax bases, it may even be disappointing to get peer reviews and blacklists instead. For a sceptic observer, an EU Council or OECD meeting on tax issues must necessarily produce some result; and if significant results cannot be achieved, the best way out is to appoint some committees and working parties, and agree on a schedule of further discussions. Nevertheless, it is obvious that EU and OECD countries are trying to maintain an international tax order under growing pressures of globalisation. A sceptical attitude may also be deceptive because an interesting re-orientation is indeed taking place. International discussions are moving away from minimum tax rates to administrative procedures. This affects countries' operational independence - their discretion in applying tax rules (McLure 1992, Cnossen 1996). The most notable examples are to be found in EU policies. This is only logical because the OECD was never a platform to discuss minimum rates (instead, the OECD Model Tax Treaty is based on the ideal of home state taxation, with limited withholding and source state taxes). But where tax havens are concerned, the OECD has made considerable progress, which includes increased attention for exchange of financial information and transparency of tax administration. In our contribution, we offer some thoughts on this new approach of tax co-ordination. As we touch upon many related issues, we do not try to be conclusive. We argue that operational independence is vital to national tax sovereignty but also a major source of jurisdictional distortion. We then proceed by discussing some recent developments in corporate taxation (the Primarolo list), taxation of savings (EU withholding tax) and taxation of e-commerce (EC proposal to tax digital services). We end by summing up some potential shortcomings of the 'new' approach.
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