The Future of Avoiding Double Taxation

Abstract

Abstract This chapter evaluates the future of avoiding double taxation. The two main methods of mitigating international double taxation—exemption and foreign tax credit—have been an essential part of international tax law since this area of law was established. The methods are regulated in the OECD Model Tax Convention (OECD Model) in the two alternative articles 23A and 23B, and in the national legislation of different countries. The rules in the OECD Model aim at mitigating international juridical double taxation, and thereby at achieving a situation where the income in question is instead subject to single taxation. However, these objectives are not always fulfilled in the concrete application. The chapter assesses what impact the OECD Base Erosion and Profit Shifting (BEPS) Project has had so far, and can be expected to have in the future, on the methods of mitigating international double taxation. This refers to both the OECD BEPS reports published in 2015 and the continued work within the Inclusive Framework, where in 2020 two drafts—the Pillar One and Two Blueprints—were published on changes in international tax law as a result of digitalization of the economy.