Policy Note: The Study of the BEPS 4 Minimum Standards as A Legal Transplant: A Methodological Framework

Abstract

This policy note aims at setting a methodological framework for the study of legal transplants in taxation and more specifically to the use of the comparative legal theories of legal transplants, legal (tax) systems and legal (tax) culture to study the implementation of the Base Erosion and Profit Shifting (BEPS) 4 Minimum Standards. Attention will be given to the following questions who is participating as donor or recipient and why? how the tax systems and tax culture (actors) influence the process? and what are the rules that will be implemented? By using comparative legal theories, this policy note allows to explain the reasons why countries decided to implement the BEPS 4 Minimum Standards. These reasons are for instance, prestige, political incentives, and chance and necessity. Furthermore, the study of the differences in tax systems and tax culture can allow policy makers in international organizations and countries to understand the transplantation process and the development of tax rules implementing the BEPS 4 Minimum Standards. The theory of tax systems will take into account the differences between civil law, common law and mixed legal systems. The theory of tax culture will take into account the behaviour, values and attitudes of the relevant actors (the courts with tax competence, tax law-makers, taxpayers, tax administration, business associations, tax advisors, scholars, and civil society Non-Governmental Organization (NGOs.). In order to illustrate these differences, this policy note has addressed the implementation of the Principal Purpose Test in the countries participating in the BEPS Inclusive Framework. Legal transplants, tax culture, BEPS, global tax governance, principal purpose test, international taxation.