Cross-border tax arbitrage arises where a transaction is subject to two or more countries' differing tax regimes. Conflicts between the tax rules create unique opportunities for the parties to engage in profitable tax planning—opportunities that would not be available if the transaction occurred entirely domestically in one of the countries. These opportunities have been a growing feature of the multi-jurisdictional business world and have raised issues concerning whether and how countries, such as the United States, should respond. This Article examines cross-border tax arbitrage in the context of both domestic tax policy and of other international tax issues, and considers potential responses. It proposes an analytic framework for cross-border tax arbitrage based on specific case studies. The Article concludes by pro-posing a balancing test for determining the appropriate treatment of specific instances of cross-border tax arbitrage.
Diane M. Ring, One Nation Among Many: Policy Implications of Cross-Border Tax Arbitrage, 44 B.C.L. Rev. 79 (2002), http://lawdigitalcommons.bc.edu/bclr/vol44/iss1/2