October 2017  
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Issue No. 3 - 2017 of the World Tax Journal is now available online.

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Number 3 - 2017 contains the following:

Implementation v. Adaptation: BEPS in Latin America through the Lens of the ILADT Model 303

Betty Andrade Rodríguez

There are specific reasons to affirm that the BEPS Project is not fully suited to addressing the needs of Latin American countries. Therefore, adaptations to several of the BEPS Actions included in the Project are necessary. The drafting of the Multilateral Instrument as proposed in BEPS Action 15 could constitute a proper scenario for submitting and addressing the specific concerns and proposals of the region with respect to the BEPS Project. The author proposes the use of the ILADT Model to address, systematize and generate a sole proposal for the region in order to represent the needs of the region in the drafting of the Multilateral Instrument.

Why Corporate Taxation Should Mean Source Taxation: A Response to the OECD's Actions against Base Erosion and Profit Shifting 352

Luzius U. Cavelti, Christian Jaag and Tobias F. Rohner

It is widespread practice around the world that corporate entities pay taxes to the country where they are formally registered and to the country in whose territory they generate income. While the former is generally known as the “country of residence” the latter is usually referred to as the “country of source”. This article questions separate taxation based on this distinction between the country of residence and the country of source. It argues for a departure from the traditional international allocation of the right to tax corporate income and suggests that a corporate entity should instead pay income tax exclusively to the countries in which it has relevant business activities. In other words, this article advocates a “source-based corporate income tax”, meaning the global allocation of corporate income based on the source of income. Moreover, in examining the question of where business activities of multinational corporations effectively take place, this article describes criteria for determining source countries. Furthermore, it offers a method for formulary apportionment of corporate income between those countries in which a given multinational corporation generates income. The article argues that source taxation of corporate income would be coherent with the economic nature of corporate income taxation. Source taxation of corporate income would also make the arbitrary concept of corporate residence irrelevant, and it would allow the outdated legal concept of permanent establishment to be abolished. This article takes an interdisciplinary approach to argue from both legal and economic perspectives. It adds to the body of literature that discusses how countries should tax corporate entities doing business across national borders. It also contributes to the ongoing debate about the OECD’s recent controversial efforts to prevent corporations shifting profits between countries to minimize their exposure to national tax systems (base erosion and profit sharing, or BEPS).

The Impact and Role of Indirect Taxes Surrounding the Aviation Sector in Mitigating Climate Change: A Legal and Economic Analysis 391

Alice Pirlot and Sébastien Wolff

Aviation is one of the energy-intensive sectors that significantly contribute to climate change. This paper analyses the legal framework surrounding taxes applied to international civil aviation in order to determine the extent to which taxes could be adopted so as to internalize the environmental costs of air transportation.

In a first part, this article discusses the indirect taxes that are currently applied to international civil aviation from an international, European and national tax law perspective. The objective is to critically assess the preferential tax treatments in favour of the sector of international civil aviation in comparison to other transportation sectors. Then, in a second part, this article puts numbers on the legal tax advantages that benefit the international civil aviation sector. Third, in light of the limits of the current legal framework, this paper proposes to level the playing field between international civil aviation and other transportation sectors in order to (more consistently) internalize the negative environmental effects of international civil aviation.

The Right to Be Informed: The Parallel between Criminal Law and Tax Law, with Special Emphasis on Cross-Border Situations

Carlos E. Weffe H.

This paper intends to identify the similarities and differences between the standards of protection of the taxpayer and the defendant in criminal proceedings, determining whether there is any common ground for building and/or interpreting those standards in order to improve people’s protection.

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