Global Tax 50 2014: IMF

IMF is a new entry this year

The IMF describes its paper as exploring the "nature and policy implications of cross-border effects from national corporate tax policies, highlighting how these effects can be significant for developing countries, with resulting tax revenue losses sometimes quite large relative to total government revenues", adding that it "goes beyond the [G20/OECD] BEPS Action Plan".

"The IMF is asserting a more dynamic role in international tax issues," says David Spencer, of the Law Offices of David Spencer in New York.

"The [spillover] policy paper confronts two major issues which it explicitly states the OECD BEPS project does not cover, an implicit challenge to the OECD," adds Spencer. "One: the appropriate balance of taxing rights between residence countries and source countries (in particular developing countries); and two: the possible adoption of formulary apportionment."

Michael Keen, deputy director of the IMF's Fiscal Affairs department, says the IMF's technical assistance work in developing countries "frequently encounters large revenue losses through gaps and weaknesses in the international tax regime."

"The sums involved for them can be large, not just relative to corporate tax but relative to all tax revenue: 10% to 15% in some cases," he says. "The paper reports new evidence that these effects are in fact systematically more important for developing countries."

With the future of international taxing principles set to be outlined in the next 18 months, the IMF's May policy paper has definitely added to this momentum, while attempting to ensure a more even balance between the taxing rights of developed and developing countries.