Origin and Differentiation in International Income Allocation

Ivan Ozai

Research output: Working paperResearch


The present international tax rules are typically justified by origin-based theories. These theories align countries’ tax entitlements with the geographical location of the economic factors that contribute to the creation of income. Two recent phenomena have rendered origin-based approaches limited in scope. First, the economic integration of multinational corporations and the relevance of intangibles have made it infeasible to precisely pinpoint the factors contributing to the generation of income. Second, the growing disputes between countries about which economic factors should be considered relevant for sharing the international tax base have recently led to increased consideration of distributional consequences, thus moving tax policy discussions away from a clear origin-based rationale toward a consequentialist one.

The limitations of origin-based criteria for allocating taxing rights warrant an alternative normative standard. This article puts forth the differential approach as a suitable normative basis. It requires that the allocation of tax entitlements be based on distributive justice considerations, particularly in cases where origin-based approaches fail to provide satisfactory normative support.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School [wp]
Number of pages24
Publication statusPublished - 2020
Externally publishedYes
SeriesCBS LAW Research Paper


  • International tax law
  • Origin-based theories
  • Economic integration
  • Distribution-based approac

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