IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v70y2017i4p783-802.html
   My bibliography  Save this article

International Tax Planning under the Destination-Based Cash Flow Tax

Author

Listed:
  • Alan J. Auerbach
  • Michael P. Devereux
  • Michael Keen
  • John Vella

Abstract

This paper considers the implications of the destination-based cash flow tax (DBCFT) for three common ways of shifting taxable profits between countries: through manipulation of transfer prices, the use of debt, and locating intangible assets in low taxed jurisdictions. It shows that none of these planning devices would be available under a DBCFT, if adopted universally. This is because intra-group payments between two countries do not affect tax liabilities in either country. If adopted unilaterally, however, there would be an incentive to shift profit to the adopting country, at the expense of non-adopting countries.

Suggested Citation

  • Alan J. Auerbach & Michael P. Devereux & Michael Keen & John Vella, 2017. "International Tax Planning under the Destination-Based Cash Flow Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(4), pages 783-802, December.
    • Handle: RePEc:ntj:journl:v:70:y:2017:i:4:p:783-802
    DOI: 10.17310/ntj.2017.4.04
    as

    Download full text from publisher

    File URL: https://doi.org/10.17310/ntj.2017.4.04
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.
    File URL: https://libkey.io/10.17310/ntj.2017.4.04?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. V t Jedlicka, 2023. "International Tax Planning and Ownership Structure in the Czech Republic," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(64), pages 867-867, August.
    2. Michael Lennard, . "Act of creation: the OECD/G20 test of “Value Creation” as a basis for taxing rights and its relevance to developing countries," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    3. Marko Köthenbürger, 2020. "Taxation of Digital Platforms," EconPol Working Paper 41, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Shafik Hebous & Alexander Klemm & Saila Stausholm, 2020. "Revenue Implications of Destination-Based Cash-Flow Taxation," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(4), pages 848-874, December.
    5. Thomas A., Gresik & Schjelderup, Guttorm, 2022. "Tax induced transfer pricing under universal adoption of the destination-based cash-flow tax," Discussion Papers 2022/8, Norwegian School of Economics, Department of Business and Management Science.
    6. Alejandro Esteller-Moré & Shafik Hebous & Niels Johannesen & Katarzyna Anna Bilicka, 2018. "The Present and Future of Tax Havens / El presente y futuro de los paraísos fiscales / El present i futur dels paradisos fiscals," IEB Reports ieb_report_4_2018, Institut d'Economia de Barcelona (IEB).
    7. Richard Collier & Seppo Kari & Olli Ropponen & Martin Simmler & Maximilian Todtenhaup, 2018. "Dissecting the EU’s Recent Anti-Tax Avoidance Measures: Merits and Problems," EconPol Policy Reports 8, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Javier Garcia-Bernardo & Petr Janský & Thomas Tørsløv, 2022. "Decomposing Multinational Corporations’ Declining Effective Tax Rates," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 70(2), pages 338-381, June.
    9. Garcia-Bernardo, Javier & Janský, Petr, 2024. "Profit shifting of multinational corporations worldwide," World Development, Elsevier, vol. 177(C).
    10. Christophe Nshimiyimana & Dr. Jean Paul MPAKANIYE, 2024. "Effect of Value Added Tax Collection on Gross Domestic Product in Rwanda (2012-2022)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 3340-3351, August.
    11. Thomas A. Gresik & Guttorm Schjelderup, 2024. "Transfer pricing under global adoption of destination-based cash-flow taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(1), pages 243-261, February.
    12. Sara L. McGaughey & Pascalis Raimondos, 2019. "Shifting MNE taxation from national to global profits: A radical reform long overdue," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1668-1683, December.
    13. Robin Boadway & Motohiro Sato & Jean‐François Tremblay, 2021. "VAT and the taxation of rents," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 601-621, August.
    14. Johannes Becker & Joachim Englisch, 2020. "Unilateral introduction of destination-based cash-flow taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 495-513, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:70:y:2017:i:4:p:783-802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The University of Chicago Press (email available below). General contact details of provider: https://www.ntanet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.