The Institutional Setup of International Taxation

Abstract

In international tax policy, countries follow the twin goals of eliminating double taxation and double non-taxation. According to the first goal international transactions should not be disadvantaged in relation to purely national transactions so that states can realize the benefits of international economic liberalization.¹ The problem in this case is an overlap of jurisdiction to tax: double taxation results from two or more jurisdictions exerting their power to tax to the full. The second goal is to ensure that international transactions do not remain tax-free or under-taxed in either jurisdiction. International transactions should not be advantaged in relation to purely national ones and tax revenue should not be eroded. Rather than a jurisdictional overlap, the problem consists in a ‘jurisdictional vacuum’ (UNCTAD 2000, 12).