Origin and Differentiation in International Income Allocation

44:1 Dalhousie Law Journal (2021), pp. 129-150

22 Pages Posted: 24 Aug 2020 Last revised: 2 Jul 2021

See all articles by Ivan Ozai

Ivan Ozai

Osgoode Hall Law School, York University

Date Written: September 20, 2020


The present international tax rules are typically justified by origin-based theories. These theories align countries’ tax entitlements with the geographical location of the economic factors that contribute to the creation of income. Two recent phenomena have rendered origin-based approaches limited in scope. First, the economic integration of multinational corporations and the relevance of intangibles have made it infeasible to precisely pinpoint the factors contributing to the generation of income. Second, the growing disputes between countries about which economic factors should be considered relevant for sharing the international tax base have recently led to increased consideration of distributional consequences, thus moving tax policy discussions away from a clear origin-based rationale toward a consequentialist one.

The limitations of origin-based criteria for allocating taxing rights warrant an alternative normative standard. This article puts forth the differential approach as a suitable normative basis. It requires that the allocation of tax entitlements be based on distributive justice considerations, particularly in cases where origin-based approaches fail to provide satisfactory normative support.

Keywords: International tax law, Origin-based theories, Economic integration, Distribution-based approach

JEL Classification: K33, K34, F63

Suggested Citation

Ozai, Ivan, Origin and Differentiation in International Income Allocation (September 20, 2020). 44:1 Dalhousie Law Journal (2021), pp. 129-150, Available at SSRN: https://ssrn.com/abstract=3678164

Ivan Ozai (Contact Author)

Osgoode Hall Law School, York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3

HOME PAGE: http://www.osgoode.yorku.ca/faculty-and-staff/ozai-ivan/

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