| Summary: | The international effort to coordinate tax rules across nations began nearly a century ago, originally aimed
at eliminating double taxation. The effort was expanded to tax business profits on a more consistent basis
worldwide. However, these rules have changed over time without a solid foundation of clear and coherent
principles, causing schisms in dealing with multiple taxpaying entities and intragroup transactions. While
the Organisation for Economic Co‑operation and Development (OECD) has a large‑scale initiative
underway to reset international tax norms to prevent base erosion and profit shifting, the initiative is unlikely
to settle the tax challenges of the 21st century since it is likely to create further conceptual distortions. This
article tracks the historical development and evolution of international tax rules related to business profits
set out by the League of Nations, the Organisation for European Economic Co‑operation (OEEC), the
United Nations (UN) and the OECD. The fragmented approach to a narrow set of problems demonstrates
that cooperative international tax settlement is far from over. A better alternative for business taxation
would begin with removal of the concept of corporate residence, followed by reconceptualisation of base
allocation rules to determine the jurisdictions to tax.
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