Low Tax Jurisdictions and Preferential Regimes : Policy Gaps in Developing Economies
This paper reviews recent international initiatives and domestic policy developments aimed at helping countries to protect their tax base against erosion by individuals and companies that allocate assets to or route income via low tax jurisdictions...
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| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/168211552400964868/Low-Tax-Jurisdictions-and-Preferential-Regimes-Policy-Gaps-in-Developing-Economies http://hdl.handle.net/10986/31404 |
| Summary: | This paper reviews recent international
initiatives and domestic policy developments aimed at
helping countries to protect their tax base against erosion
by individuals and companies that allocate assets to or
route income via low tax jurisdictions. The paper highlights
the benefits and limitations of existing policy instruments
from the perspective of capital-importing developing
economies. Focusing on two common policy gaps for developing
economies, options are explored for (i) introducing
necessary charging provisions to ensure effective taxation
of individuals, and (ii) an anti-diversion rule tailored to
reflect developing economy contexts and administrative
constraints. These proposals include a possible definition
of excess profits in low tax jurisdictions and options for
distribution keys to reallocate profits to countries where
there is "real" economic substance and activity.
The measures discussed could also address the diversion of
profits to entities benefitting from preferential regimes in
countries with high nominal tax rates. |
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