Comparing Proposals to Tax Some Profit in the Market Country

A primary function of the international tax system is to allocate taxing rights over business profit among countries. Politically sensitive and economically consequential, the fundamentals of the current allocation have been largely fixed for a century. But recently several proposals have been made to alter it. The common feature of these proposals is that they all seek to increase the taxing rights of the market country. We define the “market” country broadly asthe location of either the direct or indirect purchaser(where the purchaser could be a business or an individual) of a good or service, or the user of certain digital platforms (“user”) ; we identify where there is an important distinction between these concepts and what they imply for the location of a market.