Destination based taxation of corporate profits - preliminary findings regarding tax collection in cross-border situations


There is currently a strong movement in the academic discussion of direct taxation to shift corporation income taxes to a destination based system where the taxing rights would be allocated on the basis of the place of sales. Two major advantages of such a shift would include the removal of current complexities in corporate income tax systems and the curbing of tax base erosion and profit shifting opportunities for multinationals. Among the leading articles on the topic, only one of them develops on the issue of tax collection. In this paper the author suggests that this “implementation issue” is more than a detail because existing collection schemes will not do the job.