IDEAS home Printed from https://ideas.repec.org/p/tky/fseres/2021cf1161.html
   My bibliography  Save this paper

Still Under-Taxing the Digital MNE? Assessing the Tax Principles of Pillar One in the BEPS Project

Author

Listed:
  • Hikaru Ogawa

    (Faculty of Economics, The University of Tokyo)

Abstract

A new principle of international taxation that gives taxing rights on the profits of digital multinational firms (MNEs) has been proposed in Pillar One of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. This note delineates this tax principle in a simple model and points out that while the new framework allows taxation of MNEs profits that could not be taxed before, it includes incentives for excessive reductions in the corporate tax rate.

Suggested Citation

  • Hikaru Ogawa, 2021. "Still Under-Taxing the Digital MNE? Assessing the Tax Principles of Pillar One in the BEPS Project," CIRJE F-Series CIRJE-F-1161, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2021cf1161
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2021/2021cf1161.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:jindec:v:50:y:2002:i:2:p:235 is not listed on IDEAS
    2. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
    3. Keen, Michael & Konrad, Kai A., . "The theory of international tax competition and coordination," Chapters in Economics,, University of Munich, Department of Economics.
    4. Tibor Hanappi & Ana Cinta González Cabral, 2020. "The impact of the Pillar One and Pillar Two proposals on MNE’s investment costs: An analysis using forward-looking effective tax rates," OECD Taxation Working Papers 50, OECD Publishing.
    5. Peter Merrill, 2016. "Innovation Boxes: Beps and Beyond," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 847-862, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Wolfram F. Richter, 2022. "Granting Market Countries the Right to Tax Profit without Physical Nexus," CESifo Working Paper Series 9556, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes Becker & Michael Kriebel, 2017. "Fiscal equalisation schemes under competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(5), pages 800-816, September.
    2. repec:hok:dpaper:286 is not listed on IDEAS
    3. Wang, Wenming & Kawachi, Keisuke & Ogawa, Hikaru, 2017. "Does equalization transfer enhance partial tax cooperation?," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 431-443.
    4. Krause, Manuela & Büttner, Thiess, 2017. "Does Fiscal Equalization Lead to Higher Tax Rates? Empirical Evidence from Germany," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168214, Verein für Socialpolitik / German Economic Association.
    5. Eichner, Thomas, 2014. "Endogenizing leadership and tax competition: Externalities and public good provision," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 18-26.
    6. Stephanie Armbruster & Beat Hintermann, 2020. "Decentralization with porous borders: public production in a federation with tax competition and spillovers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 606-642, June.
    7. Jun‐ichi Itaya & Makoto Okamura & Chikara Yamaguchi, 2016. "Implementing partial tax harmonization in an asymmetric tax competition game with repeated interaction," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1599-1630, November.
    8. Brangewitz, Sonja & Brockhoff, Sarah, 2017. "Sustainability of coalitional equilibria within repeated tax competition," European Journal of Political Economy, Elsevier, vol. 49(C), pages 1-23.
    9. Satoshi Kasamatsu & Hikaru Ogawa, 2020. "International capital market and repeated tax competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 751-768, June.
    10. Andreas Cassee, 2019. "International tax competition and justice: The case for global minimum tax rates," Politics, Philosophy & Economics, , vol. 18(3), pages 242-263, August.
    11. Thiess Buettner & Manuela Krause, 2021. "Fiscal equalization as a driver of tax increases: empirical evidence from Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 90-112, February.
    12. Buettner, Thiess & von Schwerin, Axel, 2016. "Yardstick competition and partial coordination: Exploring the empirical distribution of local business tax rates," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 178-201.
    13. Kangoh Lee, 2021. "Labor market frictions, capital, taxes and employment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1329-1359, December.
    14. Colas, Mark & Saulnier, Emmett, 2023. "Vertical migration externalities," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    15. Tidiane Ly, 2018. "Sub-metropolitan tax competition with household and capital mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1129-1169, October.
    16. Zodrow, George R, 2003. "Tax Competition and Tax Coordination in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 651-671, November.
    17. Borck, Rainald, 2003. "Tax competition and the choice of tax structure in a majority voting model," Journal of Urban Economics, Elsevier, vol. 54(1), pages 173-180, July.
    18. Thiess Buettner & Robert Schwager & Sebastian Hauptmeier, 2011. "Efficient Revenue Sharing and Upper-Level Governments: Theory and Application to Germany," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(4), pages 647-667, December.
    19. Matthieu Leprince & Sonia Paty & Emmanuelle Reulier, 2005. "Choix d'imposition et interactions spatiales entre collectivités locales. Un test sur les départements français," Recherches économiques de Louvain, De Boeck Université, vol. 71(1), pages 67-93.
    20. Teresa Garcia-Milà & Therese J. McGuire, 2001. "Tax incentives and the city," Economics Working Papers 631, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2001.
    21. Lejour, Arjan & Massenz, Gabriella, 2020. "Income Shifting and Organizational Form Choice : Evidence from Europe," Other publications TiSEM 3138edef-d645-4113-9981-3, Tilburg University, School of Economics and Management.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:tky:fseres:2021cf1161. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: CIRJE administrative office (email available below). General contact details of provider: https://edirc.repec.org/data/ritokjp.html .

    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.