Towards a Neutral Formulary Apportionment System in Regional Integration

Formulary Apportionment (FA) has been a less accepted perspective on dividing taxing rights on cross-border economic activities in the international tax regime, although there are already a few sub-national level FA systems. However, the latest development of the international tax reform efforts, including the OECD’s Pillar One Proposal and the European Union’s tax reform project “Business in Europe: Framework for Income Taxation” (BEFIT), demonstrate that FA as a possible option to address the problem of Base Erosion and Profit Shifting (BEPS) is gaining increasing acceptance and attention. The core puzzle remains: when FA becomes a feasible option, what will be important for a good FA system? This dissertation focuses specifically on the European Union.