Tax Competition: BEPS, the EU, and Individual Country Responses Lilian V. Faulhaber Associate Professor Georgetown University Law Center

What is Tax Competition? Competition over… Statutory corporate rates? Effective corporate rates? Preferential rates for certain taxpayers or income? Competition for… Revenues and other resource flows (firms, people, jobs)? Spillovers (intellectual capital)?

Two Possible Responses Enter the competition Lower statutory or effective rates Implement preferential regimes Redesign the tax system Compete on non-tax elements Prevent the competition Implement anti-tax-competition measures

Recent Trends Anti-tax-competition measures that target “harmful tax competition” Measures that target tax avoidance, particularly by multinationals Multilateral and unilateral responses

OECD/G20 Responses to Tax Competition Action 5: Nexus approach for patent boxes Spontaneous exchange of rulings

EU Responses to Tax Competition Nexus approach from OECD Recent state aid investigations List of non-cooperative jurisdictions

Anti-avoidance measures OECD/G20 Other BEPS Action Items focused on taxpayers European Union Anti-Tax-Avoidance Directive Common Base Proposals (CCTB/CCCTB) UK Diverted Profits Tax Australian Multinational Anti-Avoidance Law

Lessons from Recent Responses Anti-tax-competition measures as a form of tax competition Anti-avoidance rules as anti-tax-competition measures