Published on 01 Jul 19
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
Multinational corporations have opportunities, and face competitive pressures, to shift profits from high corporate tax rate to low corporate tax rate countries. Reasons behind the growth, and likely further growth, of profit shifting to reduce global corporate tax paid are explored. The adverse revenue, efficiency and equity effects of profit shifting provide arguments for reforms to the current system of autonomous country corporate income taxation. Four reform options are described, and their pros and cons are assessed: maintain individual country profit measures and augment regulations and international cooperation as proposed by the OECD; all countries adopt a common corporate income tax rate; form a measure of global profit and apportion the global profit to individual countries; and replace the source base income tax with a destination base cash flow tax. Each has some advantages and disadvantages, and none is a silver bullet or an obvious choice.
Professor John Freebairn holds
the Ritchie chair in economics at the
University of Melbourne. He has degrees
from the University of New England and
the University of California, Davis. Prior
to joining the University of Melbourne
in 1996, his preceding career includes
university appointments at the ANU,
LaTrobe and Monash, and periods with
the NSW Department of Agriculture
and the Business Council of Australia.
Professor Freebairn is an applied
microeconomist and economic policy
analyst with current interests in taxation
reform and environmental economics.
- Current at
01 November 2018