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21 Fla. Tax Rev. 1 (2017-2018)

handle is hein.journals/ftaxr21 and id is 1 raw text is: FLORIDA TAX REVIEW Volume 21 2017 Number 1 THE CASE AGAINST BEPS: LESSONS FOR TAX COORDINATION by Mindy Herzfeld* ABSTRACT In 2013, the Organisation for Economic Co-operation and Development (OECD), at the behest ofthe G20, embarked upon an ambitious project of coordinating and harmonizing countries' international tax rules under the guise ofcurtailing multinational companies' cross-border tax planning, generally referred to as base erosion and profit shifting, or BEPS. The project was finalized with great fanfare in November 2015. But the proclamations of success masked real underlying differences between participant countries. I argue that the project suffered from a number of flaws that largely precluded effective coordination, as a result of which the project's recommendations largely gloss over key differences in participants' goals and commitments while doing nothing to solve the systemic problems it was seeking to address. For example, while a key stated goal of the project was to align the taxation ofprofits with value creation, there was no attempt made to define the location of value creation nor to address the fact that this principle is fundamentally at odds with the arm's length principle that serves as the backbone of transfer pricing rules. The project left in its wake a system even more broken than before, but one papered over with rhetoric suggesting the illusion of * Professor of Tax Practice and Director of the LL.M. in Interna- tional Taxation Program, University of Florida Levin College of Law. Thanks to the following for helpful comments and insights: Itai Grinberg, Tsilly Dagan, Lilian Faulhaber, Chris Sanchirico, Reuven Avi-Yonah, Yariv Brauner, Yair Listoken, Zachary Liscow, Joshua Blank, Dan Shaviro, and Mitchell Kane. 1

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