This chapter continues the examination of the international tax landscape and sets out the two broad options for the reform of tax on cross-border transactions. It has a particular focus on legal constraints existing in double tax agreements and trade agreements. In responding to the challenges detailed in Chapter 3, countries are faced with the option of a consensus-driven multilateral solution, or some form of unilateral domestic interim taxation. In designing unilateral taxes, one needs to be informed and aware of the limitations imposed by existing international trade and taxation agreements. This chapter highlights the potential constraints but concludes that certain forms of unilateral taxation remain as options within these existing legal constraints.

This chapter continues the examination of the international tax landscape and sets out the two broad options for the reform of tax on cross-border transactions. It has a particular focus on legal constraints existing in double tax agreements and trade agreements. In responding to the challenges detailed in Chapter 3, countries are faced with the option of a consensus-driven multilateral solution, or some form of unilateral domestic interim taxation. In designing unilateral taxes, one needs to be informed and aware of the limitations imposed by existing international trade and taxation agreements. This chapter highlights the potential constraints but concludes that certain forms of unilateral taxation remain as options within these existing legal constraints.