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

handle is hein.journals/ftaxr21 and id is 1 raw text is: 

 Volume 21                    2017                     Number  1



                         Mindy Herzfeld*


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.


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