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Advanced Introduction to International Tax Law, Second Edition

Reuven S. Avi-Yonah

This second edition of the Advanced Introduction to International Tax Law provides an updated and succinct, yet highly informative overview of the key issues surrounding taxation and international law from Reuven Avi-Yonah, a leading authority on international tax. This small but powerful book surveys the nuances of the varying taxation systems, offering expert insight into the scope, reach and nature of international tax regimes, as well as providing an excellent platform for understanding how the principles of jurisdiction apply to tax and the connected tools that are used by countries in imposing taxes.
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Full circle? The single tax principle, BEPS, and the new US model

Reuven S. Avi-Yonah

Extract

Since 1997, I have argued1 that a coherent ITR exists that is embodied in both tax treaties and the domestic laws of most countries, including the US, and that limits the practical ability of countries to adopt any international tax rules they choose. I have further argued2 that at the core of the ITR are two principles, which I call the benefits principle (active income should be taxed primarily at source and passive income primarily at residence) and the single tax principle (all income should be subject to tax once at the rate derived from the benefits principle, i.e., active income at the consensus corporate rate and passive income at the residence rate for individuals).

This formulation has been highly controversial. While most commentators would agree that the benefits principle has been the core of the ITR since 1923, many deny the validity of the single tax principle and some doubt its coherence. In particular, the single tax principle suggests that whenever the country that has primary jurisdiction under the benefits principle refrains from taxing cross-border income, the other country (residence for active income, source for passive) should tax it instead. This seemed to fly in the face of observed reality because residence countries typically exempt or defer active income, and source countries refrain from taxing many forms of passive income unilaterally without regard to whether it is taxed at residence.

There are, however, elements of US international tax that seem consistent with the single tax...

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