Harpaz Presents Global Tax Wars And The Shift To Cross-Border Taxation At UC-Davis

Assaf Harpaz (Georgia; Google Scholar) presented Global Tax Wars in the New Era of Cross-Border Taxation at UC-Davis last week as part of the 2024 National Business Law Scholars Conference: 

International taxation is at a crossroads. In a rapidly evolving digital economy, intergovernmental organizations are competing to shape the cross-border tax agenda. Global North economies have dominated this regime through the Organisation for Economic Co-operation and Development (OECD), which has drawn backlash due to its undemocratic procedure and unfavorable outcomes for developing countries. Meanwhile, the United Nations has occupied a relatively peripheral role in global tax governance. Nonetheless, in 2023, developing countries overwhelmingly supported the establishment of a new Framework Convention on International Tax Cooperation within the UN. The unprecedented initiative marks a novel challenge to the Global North’s hegemony in international tax policymaking.

This article conceptualizes the contemporary international tax discourse as “tax wars”. It contrasts the taxing powers and interests of the OECD-led Global North with those of the UN-backed Global South. The article argues that the UN must lead a principled shift towards source-based taxation. This transition could address longstanding disparities and is becoming increasingly justified in a digital economy that does not rely on physical presence. To do so, the article proposes expanding the permanent establishment standard to permit the broader taxation of business profits in the market jurisdiction. Moreover, it endorses a framework grounded on inter-nation equity that avoids the historic replication of inequitable outcomes.

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