International Arbitration in Tax Matters

Book overview

This book adds valuable insights to the ongoing discussion about resolving cross-border tax disputes, by addressing the concerns raised against arbitration methods and exploring possible solutions.

Key themes and topics

Over the past two decades, a remarkable level of integration has occurred within national economies, giving rise to new global players and the expansion of global corporations. This globalization wave has exerted its influence across all aspects of economic life, and the world of taxation has felt the impact as well. Tax systems designed for a less interconnected world now face significant challenges in effectively operating within a borderless one. There's an ongoing debate among politicians, media, and the public concerning whether multinational enterprises (MNEs) are fulfilling their tax responsibilities adequately. A key question is whether the taxes paid by MNEs align with the value creation they generate in each foreign country they operate in. All these developments have led to heightened tax competition as nations strategically leverage their income tax treaties and tax frameworks to attract mobile economic activities.

The absence of globally accepted rules governing the taxation of MNEs has led to a substantial rise in cross-border tax disputes. However, little has changed in the methods governments employ to address these disputes. Mutual Agreement Procedures (MAPs) provided in tax treaties are the primary method for resolving these disputes. Despite certain improvements in the MAP process, it remains a slow mechanism, resulting in a growing number of unresolved cases and an escalation in instances of unrelieved double taxation. In the current uncertain economic environments, MNEs rightfully anticipate that disagreements among national tax authorities will be handled in a principled and timely manner.

This book is a compilation of the significant papers that were discussed at a conference hosted in January 2015 by the Vienna University of Economics and Business (WU). It thoroughly examines the reservations raised against arbitration and presents potential resolutions. This publication aims to make a meaningful contribution to the ongoing discourse concerning the effective resolution of cross-border tax disputes.