Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention. This paper reviews existing literature and discusses experiences in selective federal states to evaluate the economic properties of formula apportionment relative to the current international tax regime that is based on separate accounting. It highlights major advantages, such as the elimination of profit shifting within multinational groups; and it discusses new distortions and the impact on tax competition. The analysis exploits different datasets to assess the direct revenue implications for individual countries under alternative formulas. The distributional effects across countries are found to be large, reflecting major discrepancies between where profits are currently attributed and where factors of production are located or sales take place. The largest losses appear in investment hubs (i.e. countries with a disproportionate ratio of foreign direct investment to GDP), while several large advanced countries are likely to gain. Developing countries gain most likely if employment receives a large weight in the formula; they also tend to benefit, on average, from a formula based on sales by destination.

Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention. This paper reviews existing literature and discusses experiences in selective federal states to evaluate the economic properties of formula apportionment relative to the current international tax regime that is based on separate accounting. It highlights major advantages, such as the elimination of profit shifting within multinational groups; and it discusses new distortions and the impact on tax competition. The analysis exploits different datasets to assess the direct revenue implications for individual countries under alternative formulas. The distributional effects across countries are found to be large, reflecting major discrepancies between where profits are currently attributed and where factors of production are located or sales take place. The largest losses appear in investment hubs (i.e. countries with a disproportionate ratio of foreign direct investment to GDP), while several large advanced countries are likely to gain. Developing countries gain most likely if employment receives a large weight in the formula; they also tend to benefit, on average, from a formula based on sales by destination.

The book describes the difficulties of the current international corporate income tax system. It starts by describing its origins and how changes, such as the development of multinational enterprises and digitalization have created fundamental problems, not foreseen at its inception. These include tax competition—as governments try to attract tax bases through low tax rates or incentives, and profit shifting, as companies avoid tax by reporting profits in jurisdictions with lower tax rates. The book then discusses solutions, including both evolutionary changes to the current system and fundamental reform options. It covers both reform efforts already under way, for example under the Inclusive Framework at the OECD, and potential radical reform ideas developed by academics.

The challenges and opportunities of new technologies in the tax field Technological developments induced major reforms in the regulatory international and domestic tax landscapes as well as in the developments in the use of technology by tax administrations and taxpayers. New technology, especially the innovations in virtual asset-light cross-border business organizations, data analytics, service and process automation, on one hand, disrupted the well-established legal tax principles and rules and, on the other, stimulated informed data-driven and structured solutions in tax compliance. Technological advances affected nearly every area and each aspect of taxation: Direct tax regulations, indirect tax law, and tax procedures including tax compliance, and tax control functions. International organizations such as the Organization for Economic Co-operation and Development (OECD), the United Nations (UN), and the European Commission as a supranational organization fostered critical legislative reforms and proposals among which are the OECD Two-Pillar Solution to Address the Tax Challenges Arising from Digitalisation of the Economy, Article 12B of the UN Model Tax Convention to tax automated digital services, new rules for tracing transfers of crypto-assets in the EU, as well as the EU ́s VAT e-commerce package and "VAT in the Digital Age" package. While these proposals aim to address a wide range of the benefits and challenges of Economy 4.0, certain questions arise concerning the consistency of the legislative developments with their initial objectives, the appropriateness of the legal form for the economic substance of the regulated relations for the effectiveness of the regulations as well as their coherence. This volume contains a collection of scientific chapters on the general topic "Tax and Technology" that were successfully completed by the 2022/2023 LL.M. graduates of the Institute for Austrian and International Tax Law, WU. The volume is divided into three parts that contain the contributions dealing with the impact of the technology on international tax law, indirect tax law, and procedural law. Each chapter provides an in-depth analysis of a unique research question aiming to innovatively contribute to the current debate and develop a practical approach for implementing the findings.

The Dutch tax system distorts economic decisions, treats equal economic positions unequally for tax purposes, and is extraordinarily complex. Following in the footsteps of the Mirrlees Review, prominent economists from academia and the policy arena, at home and abroad, provide independent, evidence-based analyses of the system's shortcomings, as well as detailed proposals for reform. Tax by Design for the Netherlands spans the whole spectrum of taxes on labor and capital income, profits, consumption, wealth, inheritance, and charges to correct for market and individual failure, including the environment.

Schemes of residual profit allocation (RPA) tax multinationals by allocating their ‘routine’ profits to countries in which their activities take place and sharing their remaining ‘residual’ profit across countries on some formulaic basis. They have recently and rapidly come to prominence in policy discussions, yet almost nothing is known about their impact on revenue, investment and efficiency. This paper explores these issues, conceptually and empirically. It finds residual profits to be substantial, but concentrated in a relatively few MNEs, headquartered in few countries. The impact on tax revenue of reallocating excess profits under RPA, while adverse for investment hubs, appears beneficial for lower income countries even when the formula allocates by destination-based sales. The impact on investment incentives is ambiguous and specific both to countries and MNE groups; only if the rate of tax on routine profits is low does aggregate efficiency seem likely to increase.

This paper aims to contribute to the European policy debate on corporate income tax reform in three ways. First, it takes a step back to review the performance of the CIT in Europe over the past several decades and the important role played by MNEs in European economies. Second, it analyses corporate tax spillovers in Europe with a focus on the channels and magnitudes of both profit shifting and CIT competition. Third, the paper examines the progress made in European CIT coordination and discusses reforms to strengthen the harmonization of corporate tax policies, in order to effectively reduce both tax competition and profit shifting.