The Future of OECD Tax Arbitration: The Relevance of Investment Treaty and WTO Dispute Settlement Practice in Promoting a Gradual Evolution of the International Tax Dispute Resolution System

Abstract

Unlike the decisive steps that have been made in the international investment and trade regime to promote efficient resolution of pending disputes, in the international tax field, the conventional tax dispute resolution system of state negotiations has vastly remained unchanged ever since its establishment in the beginning of the twentieth century despite the heavy criticism against it by the international business and tax community. Nevertheless, after the introduction of the Anti-Base Erosion and Profit Shifting (BEPS) Project and the recent discussion for the implementation of the Global Anti-Base Erosion (GloBE) Project to further address base erosion and profit shifting and of a novel Unified Approach to address the taxation of the digitalization of the economy, a rapidly changing international tax environment calls for reconsideration of states’ stance towards the implementation of stricter dispute resolution systems in general and of international tax arbitration in particular. By analysing the political objectives of states within the International Tax Dispute Resolution (ITDR) system opposed to the international investment and trade regime through a comparative analysis, this article aims to explore the potential of a gradual evolution of the ITDR in a way that addresses both tax-authorities’ and taxpayers’ interests in a modern economy. The Future of OECD Tax Arbitration: The Relevance of Investment Treaty and WTO Dispute Settlement Practice in Promoting a Gradual Evolution of the International Tax Dispute Resolution System Two.