The paper challenges the current paradigms in the international discourse, mainly known as neutrality theories. Generally put, I will highlight the hidden assumption of the international discourse, which is that business ventures, and in the international sphere mainly corporate activity, is costless. I will argue that corporate activity has direct costs on the infrastructure of the country in which the production is taking place, and indirect costs on that country in the form of externalities.In this regard, I will broaden the scope of the debate from the paradigm to competition. While scholars, neutrally, focus on competition, countries can compete with each other on in two other main commercial fields – the field of spending and publicly provided services, and the field of regulation. Understanding the international dynamic not as tax competition but rather as investment competition will allow us to further develop our analysis, beyond the limited scope of the current debate. The question, from a worldwide perspective, is the desirability of the competition, or in other words, is it a race to the top of a race to the bottom competition.The first step of the inquiry will be the examination of the in regard to direct through entities with no limited liability. I will show that in regard to this type of investment, the international creates a problem of sup-optimal in pure and partial public goods. I will address this problem, which is unique only to international markets, as the first cross border externality problem. We will see that the problem of sub-optimal in public goods cannot be solved through any unilateral policy, either direct (taxation connected to the service such as fees) or indirect (for example income or entity taxation).The second step will concern the problem of over-production due to externalities. The problem of externalities exists in every market, including domestic markets. Yet, in domestic market countries have the incentive to minimize externalities. In the international market on the other hand, countries have no incentive to minimize externalities allocated to other countries. I will address this unique phenomenon of international markets as the second cross border externality problem. This second cross border externality problem will shed new light on the international corporate debate. I will argue that both residency based taxation, and what is understood today as territorial (or source) based taxation (meaning taxing the entity at source while taxing the distributed profits based on the investor's residency) will create extreme inefficiencies from a worldwide perspective. Furthermore, I will show that in a world with non-equal initial distribution of capital, any pure or partial residency based system has regressive affect and allocate the profits to high capitalized countries while allocating the costs to low capitalized countries. As an alternative I will offer to adopt a pure source based system, taxing both entities and distributed profits at source. In this regard, I will argue that the sourcing rules should be redefined, in order to allocate the liability to the same country to which the externalities are allocated. This framework will enable to examine the national perspective. As a unilateral policy, many countries, such as the US, adopt a pure source based system, taxing both the entity and the distribution at source. Yet, most treaties, such as the US model treaty, the UN model treaty and the OECD model treaty deviated from the pure source taxation model and adopt a mixed system, splitting the between the source and the residency country. While it is clear why high capitalized countries will wish to adopt such a system, it is an undesirable system from the perspective of low capitalized countries. Many reasons, such as economic and political pressure, as well as misguided academic consensus, corruption and others, can explain why low capitalized countries engage in those treaties. Yet, those treaties have negative utility for them. In this regard, a unique example is the one of Brazil, which refuses to provoke its taxation on profit distribution through treaties. I would argue that the Brazilian approach regarding corporate taxation should guide low capitalized countries when negotiating a treaty.