CYIL vol. 14 (2023)

CYIL 14 (2023) THE ROLE OF INTERNATIONAL ORGANIZATIONS IN ESTABLISHING THE GLOBAL… 1.2 Modern Concept of Tax Sovereignty Several factors are limiting the practical independence of countries. First, there are about two hundred tax sovereigns that compete with one another for investments, residents, and tax revenues. This puts pressure on national tax systems that must both mobilize revenue and also facilitate trade and retain and attract investment. 11 States react to the fiscal threat posed by tax havens and act on the domestic, bilateral, regional, and multilateral level. 12 Secondly, it is important to consider aspects such as international events and dependence of developing countries. 13 Countries sign international agreements to facilitate cooperation, part of which may be an automatic exchange of information, or other types of reporting. In such cases, it can be difficult to fully separate law and politics, and disregard potential consequences for states which do not agree. 14 What aspects of sovereignty, if any, may countries have to sacrifice under some of the proposed schemes of tax cooperation? The spectrum of solutions ranges from multilateral instruments to the establishment of supranational institution, 15 with an ongoing debate on regimes of dispute resolution. It is therefore interesting to consider how debates on sovereignty influence the course and design of the future structures od international tax. 1.3 Shortcomings of Bilateral Cooperation Scholars have highlighted the need for a multilateral tax treaty. However, such attempts made by the UN and OECD have failed due to difficulties in ensuring the distribution of taxation power between the source and residence states. 16 A form of cooperation that has been very successful are the double taxation treaties (DTTs) among individual states. DTTs have been developed for decades in order to prevent the income or wealth of natural or legal persons fulfilling the criteria of attachment abroad from being doubly subject to a tax. Through DTTs, states have in effect laid the foundations for a cooperative environment. As a matter of practice, the basis for a large number of treaties is formed based on model tax treaties. 17 The two most prominent model tax treaties have been developed within the OECD, and the UN. 18 Although not binding, the model treaty may create a bias, for example in favour of capital exporting countries. 19 11 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. 2. 12 GOMEZ, L. C. (2020). Transcending “Tax” Sovereignty and Tax Standardization: Three Questions. The Yale journal of international law , 45 (1), 191. CALDERÓN GÓMEZ, L. C., 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 pp. 203–204. 13 ROELEVELD, J. (2023). The 10th IBFD Global Scholar in-Residence Distinguished Lecture: Sovereignty – Does it still have a place in the international tax realm? International Taxation: What Role for the UN?, Amsterdam. 14 DIETSCH, P. (2011). Rethinking Sovereignty in International Fiscal Policy. Review of International Studies , 37 (5), 2107–2120, p. 2120. 15 Ibid. p. 2108. 16 CHAISSE, J., & MOSQUERA, I. (2023). Public International Law, International Taxation and Tax Dispute Resolution [Article]. Asia Pacific Law Review , 31 (1), 192–203. https://doi.org/10.1080/10192557.2022.2102585 , p. 192. 17 Ibid. pp. 195–196. 18 The UN has adopted a model convention that is thought to better suit the needs of developing states, primarily through allocating more taxing rights to the source state, while developed country is likely to depart from the OECD Model. 19 EMBLAD, P. (2021). Power and Sovereignty: How Economic-ideological Forces Constrain Sovereignty to Tax. Nordic Journal on Law and Society , 4 (1), 10. https://doi.org/10.36368/njolas.v4i01.206 pg. 7–8.

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