The arm's length principle in a time of transition - new principles for corporate taxation

The digitalized economy has called for a change in the principles of taxation of globally active companies. The OECD and the G20 have proposed new rules under which the state in which consumers are located (the "market state") will have greater scope for taxation. There have also been some changes to the traditional "arm's length" principle, in particular in relation to the transaction-based approach to profit sharing. Common to these developments is that the residence of consumers and the factors of production, such as capital and wages, should determine where corporate taxation should take place. The project will examine what this means for Swedish companies domiciled in a small open economy, dependent on exports and dependent on investments in research and development.