Reuven Avi-Yonah (Michigan; Google Scholar), Christine Kim (Cardozo; Google Scholar) & Karen Sam (Michigan), A New Framework for Digital Taxation, 63 Harv. Int’l L.J. 279 (2022) (reviewed by Blaine Saito (Northeastern; Google Scholar) right here):

The worldwide tax regime has broad implications for enterprise, commerce, and the worldwide political financial system. Underneath present legislation, multinational enterprises don’t pay their fair proportion of taxes to market nations the place income are generated as a result of market nations are solely allowed to tax corporations with a bodily presence there. Digital corporations, like Google and Amazon, can function fully on-line, thereby avoiding market nation taxes. Multinationals may exploit current tax guidelines by shifting their income to low-tax jurisdictions, thereby avoiding taxes within the residence nation the place their headquarters are positioned.

Not too long ago, a worldwide tax deal was reached to sort out these points. Proposed by the OECD/G20 Inclusive Framework and endorsed by almost 140 nations, this international tax deal units forth two Pillars that reform the outdated worldwide tax regimes. Pillar One addresses digital taxation whereas Pillar Two addresses a worldwide minimal tax. Nevertheless, it’s uncertain that the worldwide tax deal can be efficiently carried out, particularly with respect to Pillar One. As the main points of Pillar One have change into more and more advanced and degraded by political compromises and carve-outs, it dangers being a framework with out substance. Additionally, nations are unlikely to repeal a longtime tax instrument, Digital Providers Taxes (“DSTs”), which is an adamant requirement of america in adopting Pillar One.

This Article affords the primary complete critique of the worldwide tax deal and assesses its prospects and issues. It evaluates the U.S. responses to the proposed international deal and to DSTs. It presents the challenges, reminiscent of treaty overrides, that may happen if america implements Pillar One by govt settlement in order to bypass the treaty ratification. This Article suggests separating the 2 Pillars to protect the worldwide minimal tax. Concerning DSTs, the Article supplies a number of empirical research that reveal the hurt retaliatory tariffs trigger. Lastly, it endorses the U.N. digital taxation proposal and proposes a brand new Knowledge Excise Tax as a normative different.

https://taxprof.typepad.com/taxprof_blog/2023/04/avi-yonah-kim-sam-a-new-framework-for-digital-taxation.html