Discussion Papers 2024

CIRJE-F-1235	"Granting Taxing Rights for a Pareto Improvement"
Author Name	Ogawa, Hikaru and Ryota Tsuchiya
Date	September 2024
Full Paper	PDF file
Remarks	Revised in October 2025.

Abstract
This study examines the effect of international taxation rules that allow market countries to tax the sales of a multinational rm represented by global tech giant. It develops an asymmetric tax competition model where one country hosts a multinational rm selling digital services over the internet worldwide. The main nding is that changes in tax rules to grant taxing rights to market countries do not lead to con icts of interest between countries, but rather to Pareto improvements: it benets not only the market countries but also the host country of a global rm whose tax base would shrink.
Keywords: Tax competition; corporate tax competition; multinational rms; tax principles

Abstract

This study examines the effect of international taxation rules that allow market countries to tax the sales of a multinational rm represented by global tech giant. It develops an asymmetric tax competition model where one country hosts a multinational rm selling digital services over the internet worldwide. The main nding is that changes in tax rules to grant taxing rights to market countries do not lead to con icts of interest between countries, but rather to Pareto improvements: it benets not only the market countries but also the host country of a global rm whose tax base would shrink.

Keywords: Tax competition; corporate tax competition; multinational rms; tax principles