CYIL vol. 14 (2023)

PAVLÍNA KRAUSOVÁ

CYIL 14 (2023)

1.1 Traditional Concept of Tax Sovereignty The principle of sovereign equality of states is generally recognized and enshrined in the Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations. 3 The sovereignty of the state allows it to pursue its collective self-determination, an exclusive authority to coerce its constituents in order to pursue its collective will. 4 The most important legitimizing value of international law remains state consent, as is clear from the sources of international law. The legitimacy of any efforts for standardization or harmonization therefore depends on informed and uncoerced consent from states. 5 Taxation is a function of governance that is part of its sovereign prerogatives. 6 It is at the core of this sovereignty, and each county is free to devise its tax system in the way it considers most appropriate. Importantly, taxation is a main revenue source of the modern state. At this moment, there is no alternative for income generation that would be a feasible alternative. 7 Specific forms of realization of tax sovereignty are different and can include imposition of taxes, determination of who is subject to tax, as well as all mandatory elements of taxation. 8 Countries are generally free to define what events trigger tax liability, or set detailed procedures for ensuring compliance, including reporting requirements, and the consequences of failing to comply in a timely manner. From a fiscal point of view, the sovereign state can even pardon certain fiscal liabilities, using amnesty acts. 9 However, today’s fiscal interdependence calls for new conception of sovereignty that assigns not only rights, but also duties, as seen in other areas of international law, for example obligations of transparency, of respect for the fiscal choices of other countries, or of distributive justice. 10 As seen below, the number of duties is on a rise, pushing the boundaries to an extent that would be difficult to imagine just a few decades ago. 3 Declaration on Principles of International Law concerning Friendly Relations and Co-operation among States in accordance with the Charter of the United Nations [New York]: 24 October 1970, United Nations. 4 DAGAN, T. (2022). Unbundled Tax Sovereignty: Refining the Challenges. https://ssrn.com/abstract=4067679 or http://dx.doi.org/10.2139/ssrn.4067679 p. 5. 5 GOMEZ, L. C. (2020). Transcending “Tax” Sovereignty and Tax Standardization: Three Questions. The Yale journal of international law , 45 (1), 191. Calderón Gómez, Luís Carlos, Transcending ‘Tax’ Sovereignty and Tax Standardization: Three Questions ( 2020). Yale Journal of International Law , Vol. 45, 2020, Available at SSRN: https://ssrn.com/abstract=4266311 p. 205. 6 LYTHGOE, G. (2022). The Changing “Landscape” of Sovereignty Viewed through the Lens of International Tax: Reterritorializing the Offshore. Canadian Yearbook of International Law/Annuaire canadien de droit international , 59 , 171–199. https://doi.org/10.1017/cyl.2022.13 p. 173. 7 KJOSEVA, E. N. (2021). Taxation in Era of Globalization and Digitalization: Issues and Challenges on National Tax Sovereignty. Iustinianus Primus L. Rev. , 12 , 1. p. 6. 8 OSINA, D. (2023). Limits of the Tax Sovereignty of the State. https://ssrn.com/abstract=4389522 or http:// dx.doi.org/10.2139/ssrn.4389522. 9 BOIX, C. Redistribution policies in a globalized world, Chapter 8, Making Globalization Socially Sustainable, Publisher: ILO & WTO, 2011, pp. 261-296. in KJOSEVA, E. N. (2020). The OECD Multilateral Instrument: New Momentum in the International Tax Law and Its Impact on the Macedonian Tax Law [Article]. Iustinianus Primus Law Review , 11 (1), 1–9. https://search.ebscohost.com/login.aspx?direct=true&db=lgs&AN=14475890 4&lang=cs&site=ehost-live pp. 3–4. 10 DIETSCH, P. (2011). Rethinking Sovereignty in International Fiscal Policy. Review of International Studies , 37 (5), 2107–2120, p. 2107.

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