Tax law professor’s research to be taught at Harvard

International Tax Frameworks: Assessing the 2020s Compromise from the Perspective of Taxing the Digital Economy in the Great Lockdown, published in 2020, details how the existing international tax rules are widely regarded as being “not fit for purpose”.

Professor Elliffe’s paper traces the development of the current OECD/Inclusive Framework proposals as international tax policymakers grapple with the vexing problem of how to tax multinationals who do business across borders, particularly those that operate using a highly digitalised business model.

The “1920s compromise” (the international tax deal struck by the League of Nations after the First World War) has, arguably, at least seven major problems including the vanishing ability to tax business profits, the failure of transfer pricing in certain circumstances, the inadequacy of residence-based taxation and competition between countries.

The paper identifies and then examines the proposed multilateral consensus-driven response of the 2020s compromise to these seven major challenges to the existing international tax architecture. To what extent do they provide an answer to the most significant problems in international tax?

The conclusion reached is that the most far-reaching international tax forms of the last 100 years go some significant way to addressing the challenges of the international tax framework posed by the digital economy. The effectiveness of the multilateral response may depend on the quantum of reallocated tax but the 2020s compromise does not suffer from conceptual under reach because it is much more than modest tinkering with the existing system.

Rather the 2020s compromise radically tests the existing norms of international taxation and even if not wholly adopted can still form part of a future solution to the fundamental problem of international tax in the 21st century.

Craig is thrilled to have his work being valued by such a distinguished teacher and audience.

Brian J. Arnold is Professor Emeritus of Tax Law and Senior Adviser, Canadian Tax Foundation. He was a visiting professor at Harvard Law School from 2005 to 2011 and New York University School of Law in 2005 and 2012, and has taught International Tax courses at Melbourne and Sydney Law Schools.