The international tax system is in dire need of reform. It allows multinational businesses to shift profits to low tax jurisdictions. It affects their real and financial decisions, creating significant economic costs and stimulating competition among countries seeking to attract economic activity. The OECD/G20 Base Erosion and Profit Shifting (BEPS) project (2013-2015) aimed to reduce profit shifting. But in doing so, it exacerbated the mind-boggling complexity and uncertainty of the existing system. The reform project that followed sought to go further, but neither seriously questioned the fundamental basis of the existing system. As a result, its key problems remain.

This book, written by a group of economists and lawyers, adopts a different approach. It steps back from current political debates on combating profit shifting and the taxation of the digitalized economy, to examine fundamental issues of principle and practice in the taxation of business profit. It identifies the key faults of the existing system, which stem from the underlying structure of the system itself. It pays attention to the interests and circumstances of advanced and developing countries.

The book develops criteria for assessing alternative options. Using these, it argues that the existing system is fundamentally flawed, and that there is a need for more radical reform than is currently contemplated. It identifies the key principles needed for a successful approach, and sets out in detail two alternative reforms.