Globalization and its tax discontents : tax policy and international investments : essays in honour of Alex Easson

Increasingly linked by regional and global ties, national economies depend more than ever on international investments and trade. Agreements such as NAFTA in North America and the regional integration of the European Union facilitate cross-border commerce. While trade has become international, however, taxation has remained national, preserving and strengthening one of the few remaining barriers to the flow of cross-national investments. In __Globalization and Its Tax Discontents__, some of the world's leading international tax scholars identify the ways that taxes can inhibit or promote international investments, and assess both government and private market responses to present challenges. Given the lack of meaningful government cooperation, the contributors integrate economic theory with elements of history, gender theory, and international relations to explore the potential development effective international tax rules and processes to tax international investments. Innovative, interdisciplinary, and comprehensive, __Globalization and Its Tax Discontents__ sheds light on one of the last real policy battlegrounds of globalization. Cover 1 Contents 6 Preface 14 PART I: DESIGNING TAX RULES FOR FOREIGN DIRECT INVESTMENT 16 1 Introduction: The Last Battleground of Globalization 18 1.0 The Battle for International Investments 18 2.0 The Increasing Sensitivity of Cross-border Investment to Tax 20 3.0 The Need for Diverse Scholarly Tools to Address Policy Concerns 22 4.0 Outline of the Book 24 2 Taxing Foreign Direct Investment in a Non-cooperative Setting: Contributions by Alex Easson 33 1.0 Introduction 33 2.0 Policy Implications of a Non-cooperative Setting 34 3.0 Designing Tax Incentives in a Non-cooperative Setting 38 4.0 Collective Action Responses 43 5.0 Conclusion 45 3 China’s Tax Incentive Regime for Foreign Direct Investment: An Eassonian Analysis 50 1.0 Introduction 50 2.0 China’s Tax Incentives Prior to 2008 52 3.0 The Tax Incentives Regime in the 2008 EIT Law 55 4.0 Conclusions 64 4 Outbound Direct Investment and the Sourcing of Interest Expense for Deductibility Purposes 75 1.0 Introduction 75 2.0 Behavioural Margins Implicated by an Unrestricted Interest- Expense Deduction 77 3.0 National Welfare, Ownership Neutrality, and Interest Deductibility 79 4.0 The ‘Middle Ground’ Appeal of a Thin-Capitalization-Deductibility Restriction 84 5.0 Conclusion 90 5 Assessing the Foreign Direct Investment Response to Tax Reform and Tax Planning 99 1.0 Introduction 99 2.0 The Basic Approach to Assessing the FDI Response to Tax Reform 102 3.0 Cross-border Financing Developments 106 4.0 Cross-border AETR/METR Analysis: A Focus on Tax-Planning Effects 108 5.0 Factoring Tax Planning into Assessments of the FDI Response to Tax Reform 121 PART II: THE IMPACT OF GLOBALIZATION 130 6 Improving Inter-nation Equity through Territorial Taxation and Tax Sparing 132 1.0 Introduction 132 2.0 Inter-nation Equity 133 3.0 Why Should Equity Be Taken Seriously Now? 136 4.0 Tax Reforms towards Inter-nation Equity 140 5.0 Conclusions 144 7 Harmonizing Corporate Income Taxes in the United States and the European Union: Legislative, Judicial, Soft-Law, and Cooperative Approaches 153 1.0 Introduction 153 2.0 Corporate Tax Harmonization in the EU 154 3.0 Corporate Tax Harmonization in the United States 159 4.0 Summary Comparison and Commentary 162 8 Missing Women: Gender-Impact Analysis and International Taxation 168 1.0 Finding Women in International and Tax Law 168 2.0 The Gender Impact of Overseas Development and Aid Programs 169 3.0 Domestic Taxation of Outward FDI 172 4.0 Developing-Country Taxation of Inward FDI 178 5.0 Conclusions 180 9 Globalization and the Hong Kong Revenue Regime 186 1.0 Introduction 186 2.0 The Evolution of Hong Kong’s Political Structure 187 3.0 Revenue Regime Development in Hong Kong 189 4.0 Conclusion 193 PART III: TAX TREATIES 202 10 Canada’s Evolving Tax Treaty Policy toward Low-Income Countries 204 1.0 The Importance of Tax Treaty Design for Low-Income Countries 204 2.0 Alex Easson’s Assessment of Canada’s Tax Treaty Policies to 1988 207 3.0 Canada’s Tax Treaty Policy toward Low-Income Countries since 1988 210 4.0 Future Directions in Canada’s Tax Treaty Policy toward Low-Income Countries 221 11 Tax Treaties and the Taxation of Non-residents’ Capital Gains 227 1.0 Introduction 227 2.0 Why Land? 229 3.0 Gains and Capital Gains 232 4.0 Real Property 238 5.0 Interposed Entities 241 6.0 Applying Pre-capital Gains Treaties 246 7.0 Looking Forward 248 12 Tax Treaty Templates 254 1.0 Introduction 254 2.0 Problems with the Current Tax Treaty Network 254 3.0 A Possible Solution 256 4.0 Conclusion 266 PART IV: TAXING CROSS-BORDER SERVICES AND SERVICE PROVIDERS 270 13 Tax Discrimination and Trade in Services: Should the Nondiscrimination Article in the OECD Model Treaty Provide the Missing Link between Tax and Trade Agreements? 272 1.0 Overview 272 2.0 Trade Agreements 274 3.0 The Non-discrimination Article in the OECD Model 277 4.0 The Interaction of Tax and Trade Agreements: The Bottom Line 279 5.0 Proposed Solution: Expand the Non-discrimination Article 282 6.0 Other Reasons Not to Expand the Non-discrimination Article 287 7.0 Conclusions 287 14 The New Services Permanent Establishment Rule in the Canada-United States Tax Treaty 295 1.0 Introduction 295 2.0 The Services PE Rules in the United Nations and OECD Model Conventions 296 3.0 Article V(9) of the Fifth Protocol 298 4.0 Conclusion 313 15 Consumption Taxation of Cross-border Trade in Services in an Age of Globalization 320 1.0 Introduction 320 2.0 Taxation of Goods 322 3.0 Taxation of Services 323 4.0 Conclusion 333 Contributors 344 Index 346 A 346 B 346 C 346 D 348 E 348 F 348 G 349 H 349 I 350 J 350 K 350 L 350 M 351 N 351 O 351 P 352 Q 352 R 352 S 353 T 353 U 354 V 354 W 355 Z 355 Introduction : the last battleground of globalization / Arthur J. Cockfield Taxing foreign direct investment in a non-cooperative setting : contributions by Alex Easson / Arthur J. Cockfield China's tax incentive regime for foreign direct investment : an eassonian analysis / Andrew Halkyard and Ren Linghui Outbound direct investment and the sourcing of interest expense for deductibility purposes / Tim Edgar Assessing the foreign direct investment response to tax reform and tax planning / W. Steven Clark Improving inter-nation equity through territorial taxation and tax sparing / Jinyan Li Harmonizing corporate income taxes in the United States and the european union : legislative, judicial, soft-law, and cooperative approaches / Charles E. McLure, Jr Missing women : gender-impact analysis and international taxation / Kathleen Lahey Globalization and the Hong Kong revenue regime / Richard Cullen and Antonietta Wong Canada's evolving tax treaty policy toward low-income countries / Kim Brooks Tax treaties and the taxation of non-residents' capital gains / Richard Krever Tax treaty templates / Victor Thuronyi Tax discrimination and trade in services : should the non-discrimination article in the OECD model treaty provide the missing link between tax and trade agreements? / Catherine Brown The new services permanent establishment rule in the Canada-United States tax treaty / Brian J. Arnold Consumption taxation of cross-border trade in services in an age of globalization / Walter Hellerstein.

Increasingly linked by regional and global ties, national economies depend more than ever on international investments and trade. Agreements such as NAFTA in North America and the regional integration of the European Union facilitate cross-border commerce. While trade has become international, however, taxation has remained national, preserving and strengthening one of the few remaining barriers to the flow of cross-national investments.

In Globalization and Its Tax Discontents, some of the world's leading international tax scholars identify the ways that taxes can inhibit or promote international investments, and assess both government and private market responses to present challenges. Given the lack of meaningful government cooperation, the contributors integrate economic theory with elements of history, gender theory, and international relations to explore the potential development effective international tax rules and processes to tax international investments. Innovative, interdisciplinary, and comprehensive, Globalization and Its Tax Discontents sheds light on one of the last real policy battlegrounds of globalization.

"Increasingly linked by regional and global ties, national economies depend more than ever on international investments and trade. Agreements such as NAFTA [North American Free Trade Agreement] in North America and the regional integration of the European Union facilitate cross-border commerce. While trade has become international, however, taxation has remained national, preserving and strengthening one of the few remaining barriers to the flow of cross-national investments "This book draws from essays given at a symposium held in honour of Professor [Alex] Easson at Queen's Law on 29 February 2008"--Preface