Study Of International Tax Competition Law

Tax competition refers to a trend of taxation behaviors in today's globalized international economic arena that many governments, both at the national and local level, reduce tax rates, provide tax preferential benefits, and take other tax-cut measures to reduce business taxpayer's tax burden in the effort to attract the mobile elements of production such as international active capital and international trades and therefore to promote the development of their economy.On the one hand, economic globalization and the advancement of science and technology have blurred the national tax jurisdiction boundary. Multinational corporations no longer attach themselves intensely to their home countries and economic environments for development. Instead, they pursue maximum profit through thorough preparation, advanced organization form, the best strategic region combination, the lowest cost disbursement, and the least commercial and political risk in the international economic arena. In recent years, developing nations' overall investment environment gradually improves; geopolitical stability reduces political risk for investors. Thus transnational capital's sensitivity to the investment environment has declined. Now tax cost has become a very important factor in investment policy-making and capital circulation. On the other hand, a government's tax revenue is the corner stone of its social welfare system and economical development. Both developed and developing nations strive to keep and increase their share of the pie in the global resource disposition and competition. Attracting more transnational enterprises and international capital has become a crucial part of the national foreign and economic policies. In fact, developing nations, especially those who are so-called "tax havens", have taken various tax revenue stimulation measures to seek their best position in the competition of the global resource disposition.Tax competition, in the global scope, is a result of the taxation systems of the developed countries. However, their social security systems actually do not allow the competition to deepen. Yet developing nations hope that through a preferential taxsystem, they can attract transnational capital for their economic development and then establish the social security system similar to developed countries'. Against such strategy and practice, the Organization for Economic Development (OECD), a representative of the developed countries, has accused certain countries (areas) for engaging in harmful tax competition that which has caused the actual tax rate to decline and seriously endangered other nations' economy. They call upon the international communities to resist the harmful tax competition.Developing nations, who have been accused of engaging in the harmful tax competition and possibly suffered retaliations for certain practice from developed countries, deny the existence of harmful tax competition. They agree that tax competition truly exists. But what constitute harmful tax competition is not clearly defined , and what is defined by developed countries may not be the standard for the world in general.Clearly, international tax competition is a new challenge in the economic globalization. It not only touches the basic principles of international law, for example national sovereignty principle, but also involves a country's internal revenue legislation such as anti-tax avoidance laws and regulations. Both national and international aspects affect the content of treaty law and require legal coordination between nations. The tax competition has a direct impact on state economy, legislation, administration and other political aspects. It is also significant to the healthy development of the global economy.Based on the OECD report "Harmful Tax Competition-----An Emerging Global Issue", the author has analyzed the international tax competition phenomenon and proposed concrete measures to resolve this issue from three aspects.First, the author believes basic pri...