International tax planning under the destination-based cash flow tax

Journal article

This paper considers the implications of the destination-based cash flow tax (DBCFT) for three common ways of shifting taxable profits between countries: through manipulation of transfer prices, the use of debt, and locating intangible assets in low taxed jurisdictions. It shows that none of these planning devices would be available under a DBCFT, if adopted universally. This is because intra-group payments between two countries do not affect tax liabilities in either country . If adopted unilaterally, however, there would be an incentive to shift profit to the adopting country, at the expense of non-adopting countries.

Authors: Auerbach, A; Devereux, M; Keen, M; Vella, J

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: National Tax Association
• Journal: National Tax Journal
• Volume: 70
• Issue: 4
• Pages: 783-802
• Publication date: 2017-12-01
• DOI: 10.17310/ntj.2017.4.04
• ISSN: 0028-0283
• Keywords: international taxation; tax planning; profit shifting; tax avoidance; transfer pricing; destination-based cash flow tax