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In the past ten years, I have argued repeatedly that a coherent international tax regime exists, embodied both in the tax treaty network and in domestic laws, and that it forms a significant part of international law (both treaty-based and customary). The practical implication is that countries are not free to adopt any international tax rules they please, but rather operate in the context of the regime, which changes in the same ways international law changes over time. Thus, unilateral action is possible, but is also restricted, and countries are generally reluctant to take unilateral actions that violate the basic norms that underlie the regime. Those norms are the single tax principle (i.e. that income should be taxed once – not more and not less) and the benefits principle (i.e. that active business income should be taxed primarily at source and passive investment income primarily at residence).


© 2007 IBFD. Originally published in 61 Bull. Intl. Taxn. 4, pp. 130-138, Journals IBFD. Bulletin for International Taxation is available online at Reproduced with permission.