Vanderbilt Journal of Transnational Law

First Page



The Organisation of Economic Co-operation and Development (OECD) is proposing a dramatic shift to international corporate taxation that both sets a floor for corporate tax rates across the globe and transforms how countries obtain taxing rights over large multinational corporations. This Note focuses on the proposed framework for re-allocating taxing rights over corporations away from the traditional requirement of a physical presence in a country to mere revenues in a country. This Note identifies problems with the proposal as it relates to artificially altering corporate incentives and structures, as well as the proposal's incompatibility with theories of taxation- including Adam Smith's views on the necessity and evaluation of taxes. To resolve these problems, this Note suggests modifying the OECD proposal by removing the segmentation rule for companies that would not otherwise qualify for Pillar One taxation and allocating taxing rights to countries based on jurisdiction-specific profits, not revenues. While the OECD proposal will face obstacles, these suggestions should reduce the obstacles by limiting the proposal's disruptive impact on US corporations and addressing legislators' concerns about disproportionate impact on the United States.