This article will survey the main arguments for and against territoriality and conclude that it is the wrong way to go in the short run, but can perhaps be adopted in the medium to long run in conjunction with more fundamental international tax reform. The main reason that territoriality should not be adopted now is that the OECD may be about to recommend worldwide consolidation for all its members as part of the Base Erosion and Profit Shifting (BEPS) project, and if the OECD does that, all of the standard arguments in favor of territoriality and against abolishing deferral disappear.
Law | Tax Law
Date of this Version
Working Paper Citation
Avi-Yonah, Reuven S., "Territoriality: For and Against" (2013). Law & Economics Working Papers. 87.
Published as "Arguments For and Against Territoriality." Tax Notes 139, no. 7 (2013): 797-99. (Published online May 13, 2013)
Also published as "Territoriality: For and Against." Tax Notes Int'l 70, no. 7 (2013): 661-3. (Published online May 13, 2013)