Reviving the Value Creation Principle in International Taxation

Abstract

This Article aims to clarify the value creation principle and its role in shaping international tax policy that aligns taxation with the location of economic activity. It examines recent developments in international taxation, including aligning taxation with the place of substance, taxing “excess returns” and allocating taxing rights to market jurisdictions, each addressing different aspects of value creation. The Article advocates for a balanced profit allocation method that considers both supply-side and demand-side factors, offering a comprehensive approach to developing a fair and effective international tax framework.