Tax Treaties and the Allocation of Taxing Rights with Developing Countries

Tax treaties and the allocation of taxing rights with developing countries ∗ Dimitri Paolini†, Pasquale Pistone‡, Giuseppe Pulina§and Martin Zagler¶ Worldwide income taxation in the country of residence is a legal dogma of international taxation. We question this dogma from the perspective of relations between developed and developing countries from a legal and eco-nomic perspective, and make a modern and fair proposal for tax treaties. We will show under which conditions a developing and a developed country will voluntarily sign a tax treaty where information is exchanged truthfully and whether they should share revenues. Moreover, we will demonstrate how the conclusion of a tax treaty can assist in the implementation of a tax audit system