Globalization, Multinationals and Tax Base Allocation : Advance Pricing Agreements as Shifts in International Taxation?

This paper elaborates on the emergence of so-called Advance Pricing Agreements (APA) in international taxation and corresponding APA programs in individual countries. It refers to how globalizing business processes trigger governance change on the nation state level regarding the identification and allocation of the tax base of multinational companies. The introduction of APA programs and the generation of APAs are considered to be an example of such governance change. On the basis of a governance choice model, the paper seeks to identify factors which might explain variation in the evolution of national APA programs and the implementation of individual APAs between the taxpayer and the tax authorities. Differences in institutions, economic conditions, and the actors involved are important in explaining variation across countries