Why Sub-Saharan African countries only get to tax the crumbles of corporate synergy profits: a content analysis of the revised transactional profit split method unravelling unequal power in global tax governance

It is widely recognized that international corporate taxation holds a distributional bias towards advanced economies and that developing countries only play a marginal role in tax governance-making. Yet, it is the ambition of both the G20 and the OECD to integrate developing countries in the BEPS Inclusive Framework. The Base Erosion and Profit Shifting (BEPS) Action Plan is the latest global initiative to update the international framework of corporate taxation and curb corporate tax avoidance. Nonetheless, the overall mode of integration continues to be on implementation and technical assistance in transfer pricing auditing should enable developing countries to implement the OECD transfer pricing regime despite its cost- and capacity-intensive nature. In contrast to apolitical approaches, the purpose of this paper is to critically asses how uneven power resources shape the distributional outcomes of the G20-OECD transfer pricing regime. Therefore, this study adds an additional criterion to the output legitimacy of the G20-OECD BEPS Project, namely, distributive justice. Specifically, this case-study of the reform of the guidance on the Transactional Profit Split Method (TPSM) reveals that the regime excludes low-income countries in Sub-Saharan Africa from participating in the fiscal impact of residual profits. Whereas the revised TPSM guidance expands the size of the overall cake of taxable profits, the criteria to use the TPSM and the ongoing complexity of the regime make it difficult for low-income countries in Sub-Saharan Africa to obtain a decent slice of the cake and actually eat it.