Identifying the Trans-National Enterprise for Tax and Other Purposes: An ‘Economic Entity’

Abstract

Since the first instances of establishing the notion of artificial legal personhood, the corporate form has been developing to the extent that it can claim rights that are closer in nature to individuals. In the past few decades, the simple national corporate form has grown in complexity and capital to unprecedented levels, where major TNEs are becoming more politically and economically influential, to the extent that a few large TNEs control assets and human resources more than the GDP and population of some large developing countries. Ironically, the larger TNE becomes the chances for holding it liable for the legal obligations of its members diminishes, regardless of whether these obligations are based on national or international laws. Applying the 'economic entity' theory provides the chance for addressing the TNE as one entity that can assume responsibility within its economic boundaries; a personhood that goes beyond the legal separation of its national members to a different transnational level that corresponds to its special nature, but does not reach the international personhood level. This opens the door for the national and international liability of the TNE, and provides a suitable infrastructure for an equitable tax treatment thereof.