Tax Discrimination and Capital Neutrality

States use their tax systems to influence inbound and outbound investment, but the non-discrimination article of the OECD Model limits states' ability to apply tax preferences for resident investors over non-resident investors. This paper attempts to lay out the tax policy issues underlying the non-discrimination article, and to do this, it gives background on the traditional capital neutrality benchmarks - namely, capital export neutrality (CEN) and capital import neutrality (CIN). The paper also compares the OECD Model non-discrimination principle with that of the EC Treaty.Full-text Paper