International Tax Reform, Digitalization, and Developing Economies
While significant progress has been made in international tax cooperation, the interests of developing economies require greater priority and attention. This paper considers policy options that are currently under consideration in different interna...
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/735001569857911590/International-Tax-Reform-Digitalization-and-Developing-Economies http://hdl.handle.net/10986/32530 |
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okr-10986-325302021-05-25T09:28:18Z International Tax Reform, Digitalization, and Developing Economies Clavey, Colin Pemberton, Jonathan Leigh Loeprick, Jan Verhoeven, Marinus RESOURCE MOBILIZATION TRANSFER PRICING TAX ADMINISTRATION PROFIT DIVERSION MINIMUM TAXATION INTERNATIONAL TAXATION INTERNATIONAL TAX COOPERATION While significant progress has been made in international tax cooperation, the interests of developing economies require greater priority and attention. This paper considers policy options that are currently under consideration in different international fora, drawing on the WBG's work in supporting tax policy and administration reforms in developing economies. The overall direction of the reform debate is promising and could shift taxing rights towards market jurisdictions, as well as strengthen the tools available to deter profit shifting to low-taxed entities. Some of the proposals under discussion could be adopted in the near-term but need to be better tailored to developing economy needs. This paper identifies five areas for improvement. First, the proposals relating to the allocation of global non-routine profits need to be simplified and incorporate more formulaic approaches. Second, work on the allocation of taxing rights should include in its scope the option to reallocate all non-routine profit, rather than only that part reflecting user value or marketing intangibles. Third, the (income inclusion) idea of targeting lowly taxed profits is sound, but it needs to be a tool for both capital importing and exporting countries. Fourth, detailed guidance is needed on the use of withholding tax as an efficient collection mechanism for source jurisdictions and on the application of mandatory safe harbors with an arm’s length let out. These tools can help ensure efficient administration in developing economies. And, fifth, effective administration requires appropriate access to information. Practical limitations to accessing relevant information for developing economies need to be removed. This should include an amendment to current standards allowing jurisdictions to impose robust domestic filing obligations for CBCR (and/or similar future additional reporting obligations). 2019-10-15T17:43:59Z 2019-10-15T17:43:59Z 2019-10 Working Paper http://documents.worldbank.org/curated/en/735001569857911590/International-Tax-Reform-Digitalization-and-Developing-Economies http://hdl.handle.net/10986/32530 English MTI Discussion Paper;No. 16 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
RESOURCE MOBILIZATION TRANSFER PRICING TAX ADMINISTRATION PROFIT DIVERSION MINIMUM TAXATION INTERNATIONAL TAXATION INTERNATIONAL TAX COOPERATION |
| spellingShingle |
RESOURCE MOBILIZATION TRANSFER PRICING TAX ADMINISTRATION PROFIT DIVERSION MINIMUM TAXATION INTERNATIONAL TAXATION INTERNATIONAL TAX COOPERATION Clavey, Colin Pemberton, Jonathan Leigh Loeprick, Jan Verhoeven, Marinus International Tax Reform, Digitalization, and Developing Economies |
| relation |
MTI Discussion Paper;No. 16 |
| description |
While significant progress has been made
in international tax cooperation, the interests of
developing economies require greater priority and attention.
This paper considers policy options that are currently under
consideration in different international fora, drawing on
the WBG's work in supporting tax policy and
administration reforms in developing economies. The overall
direction of the reform debate is promising and could shift
taxing rights towards market jurisdictions, as well as
strengthen the tools available to deter profit shifting to
low-taxed entities. Some of the proposals under discussion
could be adopted in the near-term but need to be better
tailored to developing economy needs. This paper identifies
five areas for improvement. First, the proposals relating to
the allocation of global non-routine profits need to be
simplified and incorporate more formulaic approaches.
Second, work on the allocation of taxing rights should
include in its scope the option to reallocate all
non-routine profit, rather than only that part reflecting
user value or marketing intangibles. Third, the (income
inclusion) idea of targeting lowly taxed profits is sound,
but it needs to be a tool for both capital importing and
exporting countries. Fourth, detailed guidance is needed on
the use of withholding tax as an efficient collection
mechanism for source jurisdictions and on the application of
mandatory safe harbors with an arm’s length let out. These
tools can help ensure efficient administration in developing
economies. And, fifth, effective administration requires
appropriate access to information. Practical limitations to
accessing relevant information for developing economies need
to be removed. This should include an amendment to current
standards allowing jurisdictions to impose robust domestic
filing obligations for CBCR (and/or similar future
additional reporting obligations). |
| format |
Working Paper |
| author |
Clavey, Colin Pemberton, Jonathan Leigh Loeprick, Jan Verhoeven, Marinus |
| author_facet |
Clavey, Colin Pemberton, Jonathan Leigh Loeprick, Jan Verhoeven, Marinus |
| author_sort |
Clavey, Colin |
| title |
International Tax Reform, Digitalization, and Developing Economies |
| title_short |
International Tax Reform, Digitalization, and Developing Economies |
| title_full |
International Tax Reform, Digitalization, and Developing Economies |
| title_fullStr |
International Tax Reform, Digitalization, and Developing Economies |
| title_full_unstemmed |
International Tax Reform, Digitalization, and Developing Economies |
| title_sort |
international tax reform, digitalization, and developing economies |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/735001569857911590/International-Tax-Reform-Digitalization-and-Developing-Economies http://hdl.handle.net/10986/32530 |
| _version_ |
1764476735005392896 |