Global Firms, National Corporate Taxes: An Evolution of Incompatibility

September 4, 2020

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Format: Chicago

Shafik Hebous. Global Firms, National Corporate Taxes: An Evolution of Incompatibility, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Balance of payments, Corporate income tax, Double taxation, Foreign direct investment, International trade, National accounts, Personal income, Tax incentives, Taxes, Trade in services

Keywords: Business organization, Company, Conduit company, Corporate income tax, Credit card company, Double taxation, Financing company, Foreign direct investment, Global, Global firm, Holding company, International tax, Management company, Multinational enterprise, Multinational enterprises, Personal income, Tax avoidance, Trade in services, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/178
Stock No:

WPIEA2020178
ISBN:

9781513556376
ISSN:

1018-5941

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