Part 1 - AL-Tax

Chapter 66.3.5 Factors explaining the use of APAsIn light of TCE with its basic model of institutions, actors, and governance structures,factors determining the governance choice of tax base identification can beclassified on four analytical levels:●●●●Institutional framework to establish an APA programInstitutional framework to work out an individual APAEconomic conditions and attractivenessActors.Table 6.2, as derived from Brem (2005), illustrates these levels with respect toa case comparison on factors determining an APA in Germany and the USA. Dataare from a recent case study.The overview above provides a preliminary model based on TCE which requiresmore empirical investigation. Notwithstanding the incompleteness of the model,the following factors could be identified for a possible explanation of the evolutionof APA programs and the use of individual APAs:●Institutional frameworks to establish APA programs: National institutions(statics) and their history (dynamics) appear to matter significantly in thedevelopment of national APA programs.❍ Federal structures of a national jurisdiction are important if they lead toan authoritative structure below the federal level with respect to incometaxation.❍ Legal and constitutional principles regarding taxation may affect the evolutionof APA programs. The principle of tax assessment (official investigationvs self-assessment) may be one possible distinction. It seems thatself-assessment supports the establishment of an APA program. No informationcould be analyzed as to whether tax principles such as ‘source-basedincome taxation’ vs ‘worldwide income taxation’ affect the evolution ofan APA program.❍ Administrative traditions determine the space for discretional power atthe administrative level. Compared with the ‘Weberian’ model, it seemsthat the Anglo-American model of administrative tradition shows somedemand (or susceptibility) for APAs because of the higher degree of discretionalpower assigned to administrative units and officers. Also, the organizationof an administration in a nation state was identified as an importantfactor in the emergence of APAs. For example, in Germany the tax assessmentauthority on corporate income tax is assigned to the federal states,133