Designing and Implementing a Destination-Based Corporate Tax

Logo SSRNBy Michael P. Devereux and Rita de la Feria

The authors argue that the current international tax system based upon the principles of source and residence is no longer suited to a globalised world economy, and the fundamentals of the international tax system need to be re-examined. They propose an R+F based cash-flow tax based on the principle of destination as a suitable alternative to taxing corporations in an international setting. The paper’s aim is to discuss the legal and practical issues which would arise in the implementation of such a tax, namely how a destination-based tax could be effectively designed and implemented. For this purpose the authors draw on experiences with designing VAT systems worldwide. It is proposed that the destination principle should be implemented through use of the customers’ location as the main legal proxy.

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By Michael P. Devereux and Rita de la Feria, posted on Wednesday December 4, 2019

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