Publication Date

Spring 2022


Harvard International Law Journal


The international tax regime has wide implications for business, trade, and the international political economy. Under current law, multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence there. Digital companies, like Google and Amazon, can operate entirely online, thereby avoiding market country taxes. Multinationals can also exploit existing tax rules by shifting their profits to low-tax jurisdictions, thereby avoiding taxes in the residence country where their headquarters are located.

Recently, a global tax deal was reached to tackle these issues. Proposed by the OECD/G20 Inclusive Framework and endorsed by nearly 140 countries, this global tax deal sets forth two Pillars that reform the outdated international tax regimes. Pillar One addresses digital taxation while Pillar Two addresses a global minimum tax. However, it is doubtful that the global tax deal will be successfully implemented, especially with respect to Pillar One. As the details of Pillar One have become increasingly complex and degraded by political compromises and carveouts, it risks being a framework without substance. Also, countries are unlikely to repeal an established tax instrument, Digital Services Taxes (“DSTs”), which is an adamant requirement of the United States in adopting Pillar One.

This Article offers the first comprehensive critique of the global tax deal and assesses its prospects and problems. It evaluates the U.S. response to the proposed global deal and to DSTs. It presents the challenges, such as treaty overrides, that will occur if the United States implements Pillar One by executive agreement so as to bypass the treaty ratification. This Article suggests separating the two Pillars to preserve the global minimum tax. Regarding DSTs, the Article provides several empirical studies that demonstrate the harm retaliatory tariffs cause. Finally, it endorses the U.N. digital taxation proposal and proposes a new Data Excise Tax as normative alternatives.



First Page



Harvard Law School


International Law | International Trade Law | Law | Taxation-Transnational | Tax Law



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