Ref. Ares(2017)5230581 - 26/10/2017 The power of states and business: Explaining transformative change in the fight against tax evasion and avoidance The Power of States and Business v2.0 19 September 2017 Document Details Work Package WP3 Lead Beneficiary University of Bamberg Deliverable ID D3.2 Date 05, 03, 2017 Submission 07, 28, 2017 Dissemination Level PU – Public / CO – Confidential / CI – Classified Information Version 1.0 Author(s) Lukas Hakelberg University of Bamberg Political Science
[email protected] Acknowledgements The project “Combatting Fiscal Fraud and Empowering Regulators (COFFERS)” has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 727145. Document History Date Author Description 03-05-2017 Lukas Hakelberg First draft 19-09-2017 Lukas Hakelberg Second draft Page 2 of 52 The Power of States and Business v2.0 19 September 2017 Contents Document Details 2 Acknowledgements 2 Document History 2 Contents 3 Executive Summary 4 1. Introduction 5 2. Power in International Tax Policy 7 3. Post-Crisis Initiatives Against Tax Evasion and Avoidance 15 3.1 The Emergence of Multilateral AEI 16 3.1.1 Points of Departure: Savings Directive and Qualified Intermediary Program 16 3.1.2 Setting the Agenda: Left-of-Center Politicians and Major Tax Evasion Scandals 17 3.1.3 Towards New Rules: Legislative Initiatives in Europe and the US 20 3.1.4 The Role of Domestic Interest Groups: Tax Evaders and Financial Institutions 22 3.1.5 Reaching International Agreement: From Bilateral FATCA Deals to Multilateral AEI 25 3.2 Incremental Change in the Fight against Base Erosion and Profit Shifting 28 3.2.1 Points of Departure: Limiting Taxation at Source Through Transfer Pricing 28 3.2.2 Setting the Agenda: Starbuck’s and the Inclusion of Emerging Economies 30 3.2.3 Towards New Rules: The BEPS Report’s Ambiguous Recommendations 32 3.2.4 The Role of Interest Groups: In Defense of the Arm’s Length Principle 33 3.2.5 Reaching International Agreement? Ongoing EU-US Bargaining over BEPS 36 4.