A Multilateral Tax Treaty. Designing an Instrument to Modernise International Tax Law. D.M. Broekhuysen

Transcription

1 A Multilateral Tax Treaty Designing an Instrument to Modernise International Tax Law D.M. Wolters Kluwer

2 Preface List of Abbreviations xi xiii CHARTER 1 Introduction 1 CHARTER 2 Efforts for Multilateral International Tax Rules: Introduction An Analysis of Earlier Efforts for Multilateral Agreement in the Area of International Taxation : The Founding Period of International Tax Law : Emerging Consensus under Model Bilateral Tax Conventions, a Comparison of the London and Mexico Drafts : Impracticalities of Further Efforts for a Comprehensive Multilateral Tax Treaty 2.3 Conclusion CHARTER 3 The Prospects of a Multilateral Agreement for International Taxation 3.1 Introduction 3.2 The Relevance of the OECD MTC in Modernising the Tax Treaty Network 3.3 The Relevance of the OECD Commentaries in Modernising the Tax Treaty Network Introduction Case Selection v

3 3.3.3 Coding and Grouping Analysis Outcomes A Level Playing Field Conclusion: The Prospects of a Multilateral Agreement for International Taxation 36 CHARTER 4 In a Perfect World: A Normative View on Multilateral Cooperation in International Taxation Introduction Two Cosmopolitan Views on Procedura! Fairness Habermas' Concept of Legitimste Law Social and System Integration Deliberative Democracy Deliberative International Tax Law Nussbaum's Social Contract The Sovereign Duty Interpreting the Sovereign Duty as a Social Contract Mutual Advantage An Open Debate about the Scope and Content of the Social Contract Continuous, Inclusive and Transparent Deliberation on Tax Rules Conclusions 56 CHARTER 5 In a Less than Perfect World: A Realistic View on Multilateral Cooperation in International Taxation Introduction Selecting the Most Promising International Relations Perspective for Analysing International Tax Relations The Neoliberal Institutionalist View on Bilateral Tax Relations Introduction Bilateralism as a Response to Asymmetrie Interests Bilateralism as a Means to Maximise Membership Surplus The Substance of Tax Treaties: Distributive Issues and 'Rules of the Road' Introducing External Effects The Neoliberal Institutionalist View on Multilateral Tax Relations The Substance of a Multilateral Agreement for International Taxation The Veil of Uncertainty A Synthesis: Uncertainty on Distributional Issues 76 vi

4 5.4.4 Some Illustrations: The Feasibility of a Multilateral Approach in Some Tax Policy Changes Two Rational Design Presumptions Point Towards Using Flexibility Mechanisms What Types of Flexibility Mechanisms? Procedural Elements of a Multilateral Agreement for International Taxation Participants Transparency Conclusions 91 CHAPTER 6 A Design Strategy for a Multilateral Agreement for International Taxation Introduction A Forum for Discussions The Level Playing Field A Quicker Tax Treaty Amendment Process Introducing the Managerial Approach to International Taxation The Design Strategy: 'Managing' International Tax Matters over Time Introduction Continuous Interaction Building on Shared Understandings Introduction Norm Entrepreneurs Epistemic Communities Transparency and Inclusivity Legal Norms Transforming International Tax Law over Time An Illustration: The Climate Change Regime Introduction The Problem Structure of Addressing Climate Change Is Comparable to that of Addressing BEPS Managing the Climate Change Problem by Multilateral Agreement Conclusions 123 CHAPTER 7 The Design of a Multilateral Agreement for International Taxation Introduction 125 Part 7A: The Core Elements of the Multilateral Agreement for International Taxation Introduction to Part 7A The Organisation Managing the Multilateral Regime The Need for Institutional Flexibility 129 vii

5 7.3.2 Treaty Bodies in International Environmental Law Can Treaty Bodies Be Used for the Multilateral Agreement for International Taxation? Guiding Principles Objectives and Guiding Principles in International Legal Instruments The Use of Objectives and Guiding Principles in the Multilateral Agreement for International Taxation The Multilateral Agreement's Network Effects Introduction Network Effects in International Public Law Can the Norms of a Multilateral Agreement Become a Binding Obligation on Third States Through Estoppel or Acquiescence? The Influence of a Multilateral Agreement on the Interpretation of Treaties with Third States A Pactum de Agenda : Harmonising Existing and Future Incompatible Bilateral Treaties with Third States The Multilateral Agreement's Potential Network Effects Conclusion of Part 7A: The Core Elements of the Multilateral Agreement for International Taxation 153 Part 7B: The Framework Convention-Protocol Design Introduction to Part 7B The Framework Convention-Protocol Design The Use of the Framework Convention-Protocol Design in International Law The Use of the Framework Convention-Protocol Design for the Multilateral Agreement for International Taxation The Relationship Between the Multilateral Agreement and the Bilateral Tax Treaty Network Introduction The Residual Rules on Conflict Resolution A Conflict Clause Governing the Relationship Between the Multilateral Agreement and the Bilateral Treaty Network Introduction The Relationship Between the Multilateral Agreement and the Bilateral Tax Treaty Network The Consequences of Conflict 163 viii

6 The Relationship Between the Multilateral Agreement and Treaties with Third States Conclusion The Use of Interpretative Flexibility Mechanisms Introduction Reservations and Menu Options Reservations and 'Menu Options' in International Law Reservations 'Menu Options' (Contracting-In and Optional Clauses) Reservations and 'Menu Options' in the Multilateral Agreement for International Taxation 'Rules of the Road' Dynamic Decision-Making Procedures The Need for Dynamic Decision-Making Procedures under the Framework Convention-Protocol Design Dynamic Decision-Making Procedures in International Law The Use of Dynamic Decision-Making Procedures in the Multilateral Agreement for International Taxation Conclusions of Part 7B: The Framework Convention-Protocol Design 184 Part 7C: The 'Agreement to Scope' Introduction to Part 7C The'Agreement to Scope' The 'Agreement to Scope' in International Public Law Pactum de Contrahendo and Pactum de Negotiando Monitoring and Reporting Mechanisms under the 'Agreement to Scope' The Use of the 'Agreement to Scope' Design for the Multilateral Agreement for International Taxation Conclusions of Part 7C: The 'Agreement to Scope' Conclusions: The Contours of the Multilateral Agreement for International Taxation 192 CHARTER 8 An Evaluation of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting Introduction Explaining the BEPS Convention Articles 3-15 Avoid Distributive Concerns Introduction Multilateral Consensus on'rules of the Road' 196 ix

7 Agreement Is Facilitated by Coordinated Bilateral Negotiations Provisions that Avoid Distributive Concerns Altogether The Convention Employs Elements of the Framework Convention/Protocol and the Agreement to Scope Designs Introductory Observations Reservations and Optional Provisions How Is the Relationship Between the BEPS Convention and the Network of Bilateral Tax Treaties Governed? The Relationship Between the BEPS Convention and the Bilateral Tax Treaty Network The Consequences of Conflict; 'Compatibility Clauses' The Relationship Between the BEPS Convention and Treaties with Third States The BEPS Convention^ COP General Aspects Interpretation and Implementation of Provisions of the Convention Amendments to the BEPS Convention Adoption of Protocols Obligations to Reach Agreement: Pacta de Negotiando The BEPS Convention: A Structural Solution to Modernising International Tax Law? Summary and Conclusions 219 CHAPTER 9 Conclusions 221 ANNEX Draft Clauses to the Framework Convention-Protocol Design and the 'Agreement to Scope' 227 A. The Framework Convention-Protocol Design 228 B. The Agreement to Scope' 238 Bibliography 247 Index 271 x