international tax reform, territorial, full-inclusion

Document Type



The OECD Base Erosion and Profit Shifting Project is now under way, its mission being to suggest ways that countries can work together and amend their domestic laws to combat the corporate profit shifting that has so affected the tax bases of many countries.

The only way to truly eliminate corporate profit shifting is to eliminate the strong motivation multinational enterprises have to achieve "double nontaxation" by engaging in profit shifting. By being subject to current home-country taxation on its worldwide earnings, a multinational cannot achieve double nontaxation. That will eliminate or significantly reduce its motivation to engage in complicated structures that shift profits into tax havens from countries where operations, sales, and services take place.

This article describes a worldwide full-inclusion approach that can eliminate the current strong motivation to shift profits. Any suggestions that the BEPS Project makes that are less than this will likely leave a strong motivation for profit shifting so that such suggested actions will only have the effect of a band-aid. The only way to really solve the problem is to eliminate the motivation.

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Tax Law Commons



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