National Interests in the Regulation of Global Corporate Tax Avoidance

Global corporate tax avoidance is fundamentally a regulatory problem, and as such it is also solvable. The reasons why solutions seem elusive are the interests of the actors involved, particularly multinational corporations (MNCs) and the high income countries where they tend to be headquartered. Their interests are affected by, and therefore central to, effective unilateral measures and the negotiation of multilateral agreements to address the problem. In this article, we review the current state of play in respect of both to demonstrate that it is fundamentally the financial interests of both the world’s largest MNCs and the world’s economically dominant states that are served by both the current regulatory arrangements and the emerging multilateral agreements. If a truly global approach were adopted – one in which powerful states surrender or share their sovereignty – then solving the problem may be achievable. Until they do so, a capacity for unilateral action by other states where MNCs operate – particularly low and middle income states that rely most on corporate tax revenue – must be preserved as a second-best alternative.