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Low Tax Jurisdictions and Preferential Regimes : Policy Gaps in Developing Economies (English)

This paper reviews recent international initiatives and domestic policy developments aimed at helping countries to protect their tax base against erosion by individuals and companies that allocate assets to or route income via low tax jurisdictions. The paper highlights the benefits and limitations of existing policy instruments from the perspective of capital-importing developing economies. Focusing on two common policy gaps for developing economies, options are explored for (i) introducing necessary charging provisions to ensure effective taxation of individuals, and (ii) an anti-diversion rule tailored to reflect developing economy contexts and administrative constraints. These proposals include a possible definition of excess profits in low tax jurisdictions and options for distribution keys to reallocate profits to countries where there is "real" economic substance and activity. The measures discussed could also address the diversion of profits to entities benefitting from preferential regimes in countries with high nominal tax rates.

Details

  • Author

    Leigh Pemberton,Jonathan, Loeprick,Jan

  • Document Date

    2019/03/12

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS8778

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2019/03/12

  • Disclosure Status

    Disclosed

  • Doc Name

    Low Tax Jurisdictions and Preferential Regimes : Policy Gaps in Developing Economies

  • Keywords

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Citation

Leigh Pemberton,Jonathan Loeprick,Jan

Low Tax Jurisdictions and Preferential Regimes : Policy Gaps in Developing Economies (English). Policy Research working paper,no. WPS 8778 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/168211552400964868/Low-Tax-Jurisdictions-and-Preferential-Regimes-Policy-Gaps-in-Developing-Economies