The Complementary Role of the WTO in the Enhancement of the Base Erosion and Profit Shifting Project

Lijun Zhao, Angelina Karaivanova and Pengfei Zhang
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Lijun Zhao: The City Law School, City, University of London, London EC1V 0HB, UK
Angelina Karaivanova: The City Law School, City, University of London, London EC1V 0HB, UK
Pengfei Zhang: Faculty of Business, Law and Digital Technologies, Solent University, Southampton SO14 0YN, UK

World, 2021, vol. 2, issue 2, 1-28

Abstract: The current rules on international tax do not function properly due to the gaps which allow for tax manipulation. Whereas most tax agreements largely contribute to the prevention of double taxation, they do not effectively approach double non-taxation matters arising from tax competition based on the agreements’ bilateral nature. In order to tackle this issue, the Base Erosion and Profit Shifting project was introduced. Developed under the Organization for Economic Co-Operation and Development framework, the Base Erosion and Profit Shifting project deals with tax avoidance practices that use mismatches and gaps in tax rules. Nevertheless, the success of this new soft law initiative requires a forum that can promote and enforce its recommendations. The structural nature of the Organisation for Economic Co-operation and Development has led to the consideration of the World Trade Organization to be this forum by many. However, the World Trade Organization covered agreements are drafted in a way that includes some of the tax competition matters but not others, including traditional tax havens. This paper aims to bridge the gaps in the area of the international tax regime. By examining the international trade and international tax regimes, it is shown that there is space for variations in the World Trade Organization broadly drafted agreements for such matters to find a resolution. It is argued that the World Trade Organization can play a complementary role in the enforcement of the new international tax rules.

Keywords: Base Erosion and Profit Shifting (BEPS); World Trade Organization (WTO); international tax regime; Organisation for Economic Co-operation and Development (OECD); global tax reform (search for similar items in EconPapers)
JEL-codes: G15 G17 G18 L21 L22 L25 L26 Q42 Q43 Q47 Q48 R51 R52 R58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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