APR 22 2018

Splitting the Riches: The Present and Future of Taxation by Formula





The current framework of international corporate taxation—based on the “arm’s-length principle” to split profits of multinationals between countries—is increasingly being challenged by experts, businesses and civil society. New international standards and guidelines under the G20/OECD BEPS initiative aim at addressing key weaknesses in the current framework, but do not tackle the root cause of the significant spillovers inherent to the system. At the same time, digitalization and the growing importance of intangible assets create new challenges. These developments have elevated fundamental discussions on whether the arms-length principle is sustainable. While much has been written about the problems with the current system, much less is known about the advantages and disadvantages of an alternative system, based on a formulary approach to profit attribution. This conference will bring together various experts to discuss these issues.

Participation in the conference is by invitation only. 

Sunday, April 22, 2018
11:30 Registration and Coffee
12:00 Opening remarks

Vitor Gaspar, Director, Fiscal Affairs Department, IMF

Jan Walliser, Vice President, Equitable Growth, Finance, and Institutions, WBG



Chair: Thornton Matheson (IMF)

Presentation: Maria Coelho, Sebastian Beer (IMF)

Session 1: Review of issues

  • How do formulary methods work, and what are their advantages and possible problems?
  • How do factors in the formula relate to international tax principles, such as source and destination? How should intangible assets or digital services be incorporated?
  • What is required to implement formulary apportionment on a global scale? Is international coordination required?
  • What partial formulary methods are possible: residual profit split; minimum taxation?
12:45 Luncheon presentation: Update on IMF/World Bank Tax Policy Assessment Framework (“TPAF”)

Ruud de Mooij (IMF), Sebastian James (WB)



Chair: World Bank [tbc]


  • Joann Weiner (GWU)
  • Michael Smart (University of Toronto)
  • Thomas Hemmelgarn (European Commission)
Session 2: Panel discussion: Lessons learned from subnational systems

  • US Experience
  • Canadian Experience
  • EU proposal for a Common Consolidated Corporate Tax Base (CCCTB)
  • How are systems designed: tax base, tax rates, choice of formula, nexus?
  • What are the implications of these choices for the behavior of firms?
  • How does the system affect tax competition between subnational governments?
  • What are the main practical/technical challenges? And what are the main political issues? How important is oversight by the state to enforce the system?


Chair: Vicki Perry, IMF


  • Leonce Ndikumana (ICRICT)
  • Peter Merrill (PWC)
  • Jim Hines (University of Michigan)
  • Allison Christian (McGill University)
  • Jan Loeprick (WB) 
Session 3: Panel discussion: Prospects for international taxation

  • What is a fair and efficient division of taxing rights across countries?
  • What are the efficiency implications of alternative methods, and their implementation challenges?
  • Which formula/principle is more robust? Should countries be able to choose their own formula? What will be the welfare implications?
  • Can formulary methods be used as a complement to the current system, such as under profit split methods and as a base for minimum taxation?
16:00 Close by Chair


Other events

plugins premium WordPress