Tax Competition BEPS the EU and Individual Country

Tax Competition: BEPS, the EU, and Individual Country Responses Lilian V. Faulhaber Associate Professor Georgetown University Law Center

What is Tax Competition? • Competition over… – Statutory corporates? – Effective corporates? – Preferential rates for certain taxpayers or income? • Competition for… – Revenues and other resource flows (firms, people, jobs)? – Spillovers (intellectual capital)?

Two Possible Responses (1) Enter the competition – Lower statutory or effective rates – Implement preferential regimes – Redesign the tax system – Compete on non-tax elements (2) Prevent the competition – Implement anti-tax-competition measures

Recent Trends • Anti-tax-competition measures that target “harmful tax competition” • Measures that target tax avoidance, particularly by multinationals • Multilateral and unilateral responses

OECD/G 20 Responses to Tax Competition • Action 5: – Nexus approach for patent boxes – Spontaneous exchange of rulings

EU Responses to Tax Competition • Nexus approach from OECD • Recent state aid investigations • List of non-cooperative jurisdictions

Anti-avoidance measures • OECD/G 20 – Other BEPS Action Items focused on taxpayers • European Union – Anti-Tax-Avoidance Directive – Common Base Proposals (CCTB/CCCTB) • UK Diverted Profits Tax • Australian Multinational Anti-Avoidance Law

Lessons from Recent Responses • Anti-tax-competition measures as a form of tax competition • Anti-avoidance rules as anti-taxcompetition measures