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International Tax Law: Balancing Efficiency, Equity, and Development Aid

Dr. Matthias Valta presents insights on tax principles, Rawls' theory, tax-state competition, and DTC distribution norms.

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International Tax Law: Balancing Efficiency, Equity, and Development Aid

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  1. International Tax Law between efficiency, equity and development aidShort presentation EATLP Conference Istanbul 2014Matthias Valta Institute for Finance and Tax Law, Dr. Matthias Valta

  2. Overview • Basic principles of taxation • Legal theory / legal philosophy / economics • Reception of John Rawls’ Theory of Justice • Theory on tax/state competition and development • First concretion within system of source vs. residence taxation • Second concretion within distribution norms of DTCs Institute für Finance and Tax law, Dr. Matthias Valta

  3. 1. Basic principles: equity • Tax justification: • Global benefit principle: taxes as consideration for the states overall infrastructure and service package • Democratic aspect: • No taxation without representation • No representation without taxation •  Fiscal autonomy: different tax rates in source/residence country should affect overall burden Institute für Finance and Tax law, Dr. Matthias Valta

  4. 1. Basic principles: efficiency Benefit neutrality: State of Residence R 30 % tax burden A B High level of infrastructure & state services 30 % tax burden Low level of infrastructure & state services 20 % tax burden Institute für Finance and Tax law, Dr. Matthias Valta

  5. 1. Basic principles: Conclusio • Every country, whose infrastructure has been used to generate income, should have a share of taxation • The shares should be autonomous to each other, so that the tax burden in each country affects the overall tax burden •  Democratic accountability and feedback •  Allows for benefit neutrality, esp. important for developing countries Institute für Finance and Tax law, Dr. Matthias Valta

  6. 2. The systemofsource vs. residence • Detailed territorial attribution through source taxation • Taxation of worldwide income in the state of residence as typical source • In principle: Taxing rights should be shared between source state and state of Residence • Source state taxation might be omitted for compliance costs, especially in symmetric relations with similar tax-infrastructure ratio Institute für Finance and Tax law, Dr. Matthias Valta

  7. 2. The systemofsource vs. residence Institute für Finance and Tax law, Dr. Matthias Valta

  8. 3. Distribution norms in DTCs • Comparison of DTC models, empirical survey of DTC policy, partially also comparison of national law. • Analysis under global benefits principle: • Does distribution match contributions of the states infrastructures to the income creation? • Triangular cases: do some attributions to residence states also take care of third source states interests? • Tresholds to source taxation: efficient (net) taxation • Relevance to treaty interpretation (e.g. PE definition, TP) • Balance of payments analysis Institute für Finance and Tax law, Dr. Matthias Valta

  9. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) 3-12: months 120/183: days S = Supervisoryactivitiesincluded Institute für Finance and Tax law, Dr. Matthias Valta

  10. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) 3-12: months 120/183: days S = Supervisoryactivitiesincluded Institute für Finance and Tax law, Dr. Matthias Valta

  11. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) 3-12: months 120/183: days S = Supervisoryactivitiesincluded Institute für Finance and Tax law, Dr. Matthias Valta

  12. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) 3-12: months 120/183: days S = Supervisoryactivitiesincluded Institute für Finance and Tax law, Dr. Matthias Valta

  13. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) Balance of payments data UN servicestrade base Institute für Finance and Tax law, Dr. Matthias Valta

  14. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) Balance of payments data UN servicestrade base Institute für Finance and Tax law, Dr. Matthias Valta

  15. 3. Distribution in DTCs Distributive rules on constructionsites Art. 5 (3) Balance of payments data UN servicestrade base Institute für Finance and Tax law, Dr. Matthias Valta

  16. Dr. Matthias Valta Heidelberg University Institute for Finance and Tax Law valta (at) uni-heidelberg.de

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