Nexus for corporate income taxes in the international context: what can be learned from current developments in US state taxation?

Abstract

In order to justify taxation of a person, a country must establish that some connection exists between that country and that person. The international standard for nexus for taxing business profits, permanent establishment, was developed before the widespread globalisation of business. It is now subject to widely varying interpretations, creating uncertainty. The paper examines whether proposals before Congress for partial codification of nexus for US state tax purposes might have assisted in the resolution of some recent international cases and whether the proposals might usefully be adopted internationally.