Taxing Multinational Enterprises as Unitary Firms

ICTD Working Paper 53

39 Pages Posted: 18 Feb 2018

Date Written: June 2016


This paper explores the issues raised for international tax rules of explicitly treating multinational enterprises (MNEs) as single or unitary firms. It first briefly explains why reform of international corporate taxation is important particularly for developing countries, then outlines the flaws in the current system. It discusses the impetus created for reforms, and the political and institutional dynamics of the tax treaty system. An evaluation is provided of the results of the G20/OECD project on base erosion and profit shifting (BEPS), focusing essentially on the extent to which they moved towards a unitary approach, and the problems created by their continued adherence to the independent entity principle. It then outlines several proposals which, in different ways, would apply a unitary approach to MNEs. The remainder of the paper focuses more particularly on one variant: unitary taxation with formulary apportionment – this was the focus of the ICTD’s research programme, which resulted in the outputs discussed here. It outlines the main findings on optimal design of an international formulary apportionment system, evaluates the evidence about its possible effects on national tax revenue, and considers the possibilities and prospects for adoption of such a system regionally.

Keywords: international tax; multinationals; unitary; BEPS; transfer pricing

Suggested Citation

Picciotto, Sol, Taxing Multinational Enterprises as Unitary Firms (June 2016). ICTD Working Paper 53, Available at SSRN: or

Sol Picciotto (Contact Author)

ICTD ( email )

Institute of Development Studies
Brighton, BN1 9RE
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics