Will civil society shake up the world of tax treaties?

When a multinational company makes a cross-border investment, the relevant tax treaty between the two countries will generally sort out which country gets to tax which part of the ensuing activity and income streams. (Read more about tax treaties here.) A key question is this: how do the ensuing taxing rights over the ensuing income get shared out between a) the country receiving the inward investment (which is the source of the profits, often a poor country); and b) the country where that multinational has residence (often a rich country)?

Given political realities, it’s hardly a surprise that most tax treaties, following an OECD model, generally favour ‘residence’ over ‘source.

Now Martin Hearson has an interesting new post about the UK-Senegal tax treaty. Take a look at that graph (click to enlarge).