The Spirit of International Tax Law and International Corporate Tax Reform

The premise of this book is the Babylonian confusion around the spirit of international tax law and the lack of comprehensive research on the topic. While most appear to believe that the spirit should be equated with the intent or purpose of the law, there are many examples of corporate taxpayers who act within the object and purpose of positive law but not in line with the broadly shared expectation of what is fair in society.

This study defines the spirit of international tax law and proposes how it can contribute to making the international corporate tax system more robust through a multidisciplinary approach. The book examines the role of morality in legal philosophy, as well as how morality may affect the interpretation of legal rules. Furthermore, it considers how the OECD/G20 Inclusive Framework’s work relates to the development of political morality vis-a-vis international tax. Moreover, a comprehensive longitudinal discourse analysis substantiates the analysis.

It is identified that, in the public debate, the spirit of international tax law takes on three distinct meanings: (i) the purpose of the law or intention of the legislator; (ii) the evolving political morality that may not yet have crystalized in positive law; and (iii) personal moral preferences. The second meaning is deemed the best way to define the spirit of international tax law.

These findings raise awareness regarding the type of arguments used in the public debate and help to assign a certain objective weight to them. Moreover, the study demonstrates that efficiency and tax revenue effects are currently the dominant policy concerns regarding changes in international tax standards, while concerns about fairness are routinely placed in the background. It is contended that this fundamental hierarchy in policy concerns effectively blocks fundamental tax reform. A repurposing of the spirit of international tax law that transforms it from an implicit and abstract notion of fairness and fiscal virtuous behaviour into explicit, concrete and ambitious policy goals of the international tax system could lift such a blockade.

This book demystifies the spirit of international tax law by offering a workable definition and suggests that repurposing it from an abstract notion of fairness to concrete policy goals will strengthen the international corporate tax system.