On the Fragility of the International Taxation Legal System

Abstract

This Article focuses on the OECD’s work on harmful tax competition to
demonstrate how the OECD and subsidiary bodies’ governance structure,
and the standard-setting
process, built a fragile international taxation
legal system that is not just impairing legitimate tax competition
but also failing to promote cooperation among tax jurisdictions. The
option for the harmful tax competition work among other tax issues
covered by the OECD is justified by the difficulties faced by the WTO
Dispute Settlement Body (DSB) while adjudicating the Argentina-Financial
Services dispute. In this dispute, Panama challenged the
imposition of defensive tax measures against harmful tax competition
based on a list of non-cooperative
tax jurisdictions issued by the Argentine tax authority. The clash between the international trade
legal system and the international tax system unveiled the fragilities of
the last related not just to the global governance structure but also the
international tax standards for harmful tax competition. In spite of
the recent efforts by the OECD by the lauching of the BEPS Project, the
challenge of making the international taxation system work for all
Members and non-Members
remains.