Tax paradox of a rich developing country: Rethinking the Canadian nexus for business income taxation in a digital age.

摘要

Globalization and electronic commerce have increased the significance of Canada's choice of jurisdictional threshold for taxing multinational businesses. In the realm of global income taxation, national tax systems and bilateral tax conventions work together to allocate multi jurisdictional tax claims among nations. International tax laws must strive to resolve competing tax claims in a fair and economically sound manner. The principle of inter-nation equity requires an equitable allocation of global tax revenues among nations. While the permanent establishment concept constitutes an entrenched international legal norm, its continued use as the threshold for allocating income tax claims will likely exacerbate revenue disparities among nations, particularly in the digital economy. Electronic commerce provides the impetus for Canada to consider a source-friendly nexus for the taxation of global business income.;Canada's international tax paradox requires a choice between the continued application of an inequitable permanent establishment threshold and the adoption of an untested alternative nexus for taxing business income from cross-border transactions. The paradoxical elements of Canada's international tax policies can be appreciated through the use of economic development paradigms. In so far as Canada can be viewed as a "rich developing country", Canada may be able to resolve its international tax paradox by choosing a threshold that allows the source country greater tax room relative to the permanent establishment norm. The seemingly insurmountable political and fiscal challenges presented by a hegemonic tax power, such as the United States of America, should not preclude Canada from arguing for adoption of a fair and effective replacement to the historic permanent establishment concept. A jurisdictional sales nexus expands the scope of source-country taxation by allowing the market jurisdiction to tax the income derived by remote sellers on sales completed within the jurisdiction. If Canada's policymakers were to adopt a jurisdictional sales nexus for the taxation of international business profits, it would promote Canada's revenue interests while advancing economic justice globally.