International Taxation

Domestic-Foreign Interactions

• Closely related to the taxation of foreign income is the tax treatment of domestic activities that contribute to foreign profitability.
• For example:
• Deductibility of domestic interest expense.
• General administrative and overhead expense.
• Domestic R&D.
• Transactions with related parties.
• What are the costs of tax reforms that do not quite get these right?

International cooperation and international agreements

• UK has a large network of bilateral tax treaties.
• Are current treaty provisions sensible in light of other aspects of the UK tax system?
• Are there reform proposals that would require renegotiation of these treaties?
• The UK is also an EU member, and therefore also subject to ECJ rulings.
• How would the UK be affected by EU tax coordination and/or tax harmonization?
• What are the international implications of continued ECJ activism?

Implications for future tax reforms

• Do open economy considerations create their own pressure for UK tax reform? Is there a model toward which the system needs to move?
• What are the international ramifications of proposed reforms? To what extent do they depend on what other countries do?
• What is the revenue picture going forward? To what extent will it be necessary to find alternatives to the taxation of business profits and other forms of capital income?