Inter-country equity in the taxation of IP is a contentious issue. With its BEPS initiative, the OECD aims at taxing in accordance with value creation even though there are admitted difficulties in determining the actual place of value creation. The European Commission promotes the introduction of unitary taxation. The proposal’s drawback is that it lacks incentive compatibility in information exchange. Furthermore, it stipulates a cost-dependent apportionment of the common consolidated corporate tax base that incentivizes locating R&D in low-tax countries. Against this background, this paper makes a case for an internationally regulated split of the profit earned with imported IP.
intellectual property tax competition profit split formulary apportionment Shapley value