Some of ATA's members are currently preparing a PhD. Below is a list of the doctoral research being carried out at the moment - click on a title to view a summary of the research. Unless indicated ontherwise, the research is conducted in English.

Why and how to tax business profits in a global digitalized economy: a normative principle-based analysis of the corporate income tax and its alternatives

Doctoral research conducted by Francesco De Lillo, supervised by Prof. Tarcisio Diniz Magalhaes and Prof. Dr. Anne Van de Vijver, started on the 13th of May 2022.

The idea of levying a standalone income-based tax on corporations’ profits, although accepted by most modern tax systems, has been the object of repeated criticisms targeting weaknesses in its policy rationale, complexity and administrability issues, and distortive effects. Indeed, the digitalization of the economy has significantly exacerbated these objections. States started to design and implement new measures such as digital services taxes which are levied on a turnover basis instead of net income. Alternatively, the Oxford International Tax Group has recently brought to new life the old idea of shifting towards a form of consumption-based direct tax that would replace the existing corporate income tax (“destination-based cash flow tax”). Finally, the two-pillar approach proposed by the OECD to address tax challenges deriving from the digital economy represents another move away from the classical structure of the corporate income tax.

This research intends to assess, on the one hand, why states extend the income tax to corporations, the underlying rationale for such a policy and its validity in a world of digitalized and mobile businesses. On the other hand, the research will examine how business profit should be taxed to ensure a proper allocation of the cooperative surplus between both residence and source states, the possible alternatives and whether or not such alternatives are suitable to preserve this tax allocation function in today’s economic reality.

This thesis hypothesis ultimately seeks to demonstrate that the corporate income tax, albeit imperfect, performs a unique and fundamental function in an international setting that is not feasibly replicated by other types of taxation. In a world of interconnected tax systems and economies, where multiple states contribute to the production of global wealth, the corporate income tax plays a key role in allowing residence and source states to negotiate the distribution of this cooperative surplus among themselves, notably via tax treaties but also through political and judicial contestation in the context of soft laws.

Sustainable Value Theory for the Taxation of the Digital Economy

Doctoral research conducted by Débora Ottoni Uébe Mansur in English, supervised by Prof. Tarcisio Diniz Magalhaes and Prof. Ann Jorissen, started on the 1st of September 2021.

The challenges of the digitalization of the economy have  not only unveiled the shortcomings of the global consensus regarding tax revenue distribution embodied in traditional OECD models and guidance but have also unfolded that the way taxing rights are shared among jurisdictions does not properly reflect their contributions to the global economy.  

Despite following the guiding principle according to which corporate income taxes should be paid where value is created, the OECD’s reform solutions for the digital economy’s challenges fail in deploying a coherent value theory to underly the value-creation standard.  OECD’s Pillar One Plan overlooks that consumer markets are not the only sites where value is being created but not appropriately recognized by global tax rules. Relevant location-specific factors that drive business decisions and thus create considerable value for firms include lack of efficient environmental, labour, competition and consumer protection legislation in some jurisdictions as well as weak regulatory responses to different forms of exploitation of people and the planet. These factors, however, have been absent from reform discussions mainly because, as argued in this thesis, the prevailing theory of value does not consider them as a source of value and corporate profits. In continuing to adopt such view of value creation, international tax norms will keep favouring unsustainable practices, while depriving jurisdictions that contribute to the global economy of resources that could be used for sustainable development purposes.

 This  thesis’ ultimate objective is to propose a sustainable value theory for the international tax system. Such a theory must account for value factors that are not currently considered by existing rule sets nor by reform proposals under  at the level of the OECD. Value-generating inputs that have so far remained undetected by international tax rules relate to the possibility of multinationals saving costs around the world by exploiting human and natural resources and then turning those cost savings into high extra profits. By changing the way value creation is understood, it is possible to make existing or future international profit allocation rules serve as an instrument for promoting global sustainable development. Towards this end, the research aims to answer the following research question: can a new theory of value yield a more sustainable allocation of tax revenues under present or prospective technical legal rules?

Deus Tax Machina: The use of artificial intelligence by tax administrations in the EU and its implications for taxpayers’ fundamental rights

Doctoral research conducted by David Hadwick in English, supervised by Prof. Anne van de Vijver & Prof. Toon Calders, started on the 1st of November 2020.

In the European Union, a majority of tax administrations are using artificial intelligence and machine-learning to perform some of their fiscal prerogatives. Member States such as Belgium, France, Germany, Poland, Sweden, Spain or the Netherlands are all making use of machine learning to inter alia: collect taxpayers’ data,  verify the integrity of tax transactions, automate the validation of tax returns, or score taxpayers in accordance with their predicted risks of fraud. The abundance of data on taxpayers resulting from the digital revolution and the exponential growth in data flows, so-called Big Data, places tax administrations in a strategic position to pilot AI programs. In fact, the use of AI has already contributed to the reduction of tax administrations’ costs of compliance and overhead, and to decrease the fiscal gap in a number of EU jurisdictions. Nonetheless, cases have also shown that artificial intelligence and machine-learning bring about a number of risks, in particular when used by public administrations in a vertical context. The cases of Systeem Risico Indicatie (SyRI) and the toeslagenaffaire in the Netherlands indicate that the use of artificial intelligence by tax administrations can entail a substantial risk of conflict with taxpayers’ rights to a private life, data protection or non-discrimination.

The aim of this research is to advance knowledge on the machine-learning algorithms and AI tools used by tax administrations, the risks brought about by these tools and the ways we should regulate their use. Little is known about the different tools used by tax administrations and AI is treated in the law and in scientific literature as a monolith. Accordingly, the goals of this thesis are to create a taxonomy of the different AI tools used by national tax administrations. Subsequently, this thesis will determine the risks associated with each tool, and examine how norms regulating AI tools in the EU could safeguard against abuse of taxpayers’ fundamental rights.

In search of a more balanced allocation of taxing powers between developed and developing countries: a plea for inter-nation equity

Doctoral research by Sharon Waeytens and supervised by prof. dr. Bruno Peeters and prof. dr. Anne Van de Vijver. Started on 1 February 2021.

The renegotiation and termination of tax treaties demonstrates the growing concern of developing countries regarding tax treaty abuse and dissatisfaction with the existing allocation rules of taxing powers. Indeed, developing countries have for many years been arguing that the allocation of taxing powers only benefits developed countries. Up to date, no measures have been proposed to counteract the adverse distribution of taxing powers for developing countries. The OECD, however, has addressed the discontent of developed countries with respect to the allocation of taxing powers. Developed countries argued that, under the current allocation rules, they could not collect a ‘fair share’ of tax on the profits earned by highly digitalized businesses and therefore Pillar One (of the BEPS-project initiated by the OECD) was solely designed to revisit taxing power allocation rules in view of the digitalization of the economy. It has indeed been stated that Pillar One was not based on the inter-nation equity principle. Furthermore, the prevention of tax treaty abuse appears to be a challenge of major interest for developing countries considering that the loss in tax revenues, as a result of tax treaty abuse, would roughly be three times as high in developing countries than in OECD countries. Moreover, the researcher is of the opinion that the proposed measures of action 6 (of the BEPS-project) are insufficient to tackle tax treaty abuse.

The aim of this research is to advance knowledge on inter-nation equity between developed and developing countries in the field of taxation and, more specifically, what guidance inter-nation equity provides in respect of the distribution of taxation powers. The researcher will more specifically investigate how certain distribution mechanisms such as the formulary apportionment method could contribute to inter-nation equity between developed and developing countries, as well as mitigate treaty abuse and treaty dodging. The researcher will study how distribution techniques (such as the formulary apportionment method) based on immobile indicators, which are disconnected from the taxpayer’s decisions and behavior but that refer to the characteristics of developing countries, are fit to contribute to inter-nation equity and to tackle the improper use of tax treaties. The researcher will also investigate how alternative indicators (such as technical-administrative conditions), could contribute to such goals. The research will consider the UN and OECD Model Tax Convention as instruments to implement such distribution criteria. Moreover, the researcher will analyze investment treaties due to the fact that such treaties could even be more important for developing countries. This research will also provide policy recommendations for an alternative, more balanced, method of allocating taxing powers in tax treaties between developed and developing countries.

Régime fiscal des investissements miniers face à la lutte contre la planification fiscale agressive à l’ère de la digitalisation de l’économie. Problèmes, enjeux et perspectives

Christophe Malenga Divava started his doctoraal research supervised by prof. dr. Anne Van de Vijver and prof. Tarcisio Diniz Magalhaes in September 2021.

The research will be on the tax regime of mining investments in DRCongo and aggressive tax planning in an era of a digitalized economie.

The research will be conducted in French. The official titel of the research proposal is : « Régime fiscal des investissements miniers face à la lutte contre la planification fiscale agressive à l’ère de la digitalisation de l’économie. Problèmes, enjeux et perspectives.”

Mining is becoming increasingly important due to the huge increase in global demand for raw materials to supply industries in almost all sectors of the global economy. This boom has inevitably led to massive investments, particularly in the African continent, which has become the playground of the extractive industries thanks to its potential in mining resources. Designated as a vector of modernization and sustainable development by national and regional development plans and strategies (Lagos Plan and Africa Mining Vision), these resources should largely contribute to the revenues of States. Far from the aspirations, the reality is quite different. Resource-rich countries, largely developing economies, still struggle to mobilize their resources effectively. Of course, the reasons for this are to be found in a combination of factors that we do not need to prioritize. However, we recognize that aggressive tax planning by mining companies is of particular interest as a means of eroding the tax base and shifting profits to low tax jurisdictions. This phenomenon is all the more important as fighting against it has become one of the major priorities at the international level. This need has increased with the digitalization of the economy due to business models that fall outside of traditional regulatory framework. As the mining sector presents business models that are different from these, the debates on the redesign of international digital taxation within the OECD demonstrate that it is no longer possible for the literatures on the digitalization of the economy and mining taxation to ignore each other without consequences for the latter. Mining taxation is at the crossroads of this global phenomenon to the extent that some of the measures envisaged may impact the mobilization of resources from mining. In this context, it is interesting to question the responsiveness of the mining system developed outside the framework of this new situation. Thus, this research will explore possible reforms that can be implemented to ensure that resource mobilization in resource-rich countries is not negatively impacted. A broader analysis will also include a study of anti-avoidance measures to limit the risks of tax avoidance. I will conduct this research with a focus on the mining sector in the DRCongo.

Does corporate governance impact the level of tax disclosures?

Doctoral research by Michiel Van Roy and supervised by prof. dr. Ann Jorissen, prof. dr. Anne Van de Vijver and prof. dr. David Martens. Started on 1 September 2020.

Tax fairness of companies has increasingly become a point of interest for society. According to the report on the “Public Consultation on the Review of the Non-Financial Reporting Directive” (2020) of the EU, tax is the fourth most important non-financial topic on the agenda. There is an increasing amount of pressure on companies to be transparent on their tax payments because mandatory disclosure regimes often do not compel companies to disclose detailed information on their taxes. Therefore, society calls companies to voluntarily disclose more information. This research will examine whether there is an association between tax transparency and corporate governance characteristics of companies.

Recently, corporate governance codes have been adapted to a broader, stakeholder-based view. This is in line with the increasing expectations of companies to serve a multitude of stakeholders instead of just shareholders, increasing the importance of Corporate Social Responsibility (CSR). Therefore, the theoretical framework of this study will be grounded in the established literature researching the impact of corporate governance on CSR disclosure and Voluntary Disclosure. Previous research has shown a positive relation between certain characteristics of corporate governance and CSR-disclosures, as well as between corporate governance characteristics and voluntary disclosures.

Tax information can be argued to form a part of CSR disclosures or can be disclosed voluntarily. Taxation forms an interesting topic however, since many companies are often hesitant to disclose information on their taxes paid due to concerns like loss of competitiveness. Therefore, it is interesting to examine whether the previously established relations in the disclosure literature hold when the level of tax information disclosed is being examined.

In an additional analysis, the study will examine whether tax transparency is related with tax avoidance/evasion. In this regard, this study will contribute to the debate on whether public disclosure of tax information is associated with lower tax avoidance, on which previous research has found mixed evidence.

This study is unique in the regard that it is, to the best of our knowledge, the first study to examine whether there is a relation between distinct corporate governance characteristics and the level of tax disclosure. The recent publication of GRI 207-standard on taxes provides an opportunity to improve existing tax disclosure indices used in previous literature. 

The virtual permanent establishment

Doctoral research by Eva Baekelant and supervised by prof. dr. Anne Van de Vijver. Started on 1 September 2020.

The research subject will be “the virtual permanent establishment”. There's room for much more investigation into how best the "permanent establishment concept" can survive legal scrutiny in international law whilst still being reshaped by a digitalized economy.

After all, the traditional permanent establishment concept as it is nowadays enshrined in the OECD Model Convention no longer seems appropriate as digitalized companies realize profits in countries without necessarily being physically present, while a physical presence is at the heart of the traditional permanent establishment concept. Moreover, actors in the digitized economy are increasingly mobile, while the traditional fixed establishment concept assumes a fixed physical presence. Finally, the “digital economy” is a highly volatile concept that can encompass a wide range of business models. As a result, the traditional permanent establishment concept needs to be tested against new types of activities as a result of the digitalized economy.

The research will start by examining the legal, economic and philosophical foundations of international law in a digital context. Subsequently, the current legal framework of the permanent establishment concept will be outlined so that the current shortcomings can be better understood in a digital context. In order to situate the above, the typical characteristics of the digitalized economy will be analyzed with the aim of finding a dematerialized link with a market jurisdiction on which a digitalized company is active. In a final chapter, all acquired insights will be brought together and an answer will be formulated to the main research question, namely the question of what the permanent establishment concept as a nexus should look like, so that it meets the quality requirements arising from the foundations of international taxation law in light of a digitalized economy.

Fairness in Machine Learning

Doctoral research by Daphne Lenders and supervised by prof. dr. Toon Calders and prof. dr. Sylvie De Raedt. Started on 1 October 2020.

Fairness in Machine Learning

Doctoral research by Ewoenam Kwaku Tokpo and supervised by prof. dr. Toon Calders. Started in May 2020.

Design of a flexible valuation tool for companies

This research started in 2020 and is sponsored by the company HLB Dodémont - Van Impe & Co cvba. Supervisor: prof. dr. Eddy Laveren.

With every purchase or sale of a company it is necessary that the buyer and the seller can make a good estimate of the value of the company. Moreover, one of the main causes of problems and conflicts in acquisitions and business successions is the lack of a reliable estimate of the company's market value. Each valuation is to some extent a subjective valuation that incorporates a certain vision of the future and the reaction of the competitors.The digital valuation tool allows you to obtain an idea of ​​the market value of a company on the basis of accounting data and supplemented with a number of crucial parameters regarding the future evolution of the company's financial condition. Valuation parameters are to a large extent entered by the users. The users are given the opportunity to design multiple scenarios and to calculate their impact on the market value of the company according to the usual common valuation methods. When calculating the value of a company, attention must also be paid to the tax aspects of the valuation.

Transfer pricing framework in a digitalized economy

Doctoral research by Mariya Otto and supervised by Anne Van de Vijver en Bruno Peeters. Started on 10 March 2020.

Our international profit allocation rules, as refined by the BEPS-project, are based on the paradigm of ‘value creation’, i.e. the allocation of income (and thus taxation) should be aligned with the economic activity that generates that income. It is, however, this notion of ‘value creation’ that has in particular been challenged in light of the digitalized economy. More in particular, the question arises whether value creation can be (partially) attributed to the market jurisdiction(s), i.e. the customer and/or user jurisdiction.

One of the key peculiarities of the digitalized economy lies in the fact that digitalized businesses can generate profit in a market jurisdiction without any physical presence or without the need to deploy significant people functions. Even if there would be a (limited) physical presence in the market jurisdiction, the current profit attribution rules depend on the functional analysis (i.e. the functions performed, assets used and risks assumed) and more specifically on the significant people functions in case of permanent establishment. The digitalized economy is, however, characterized by the decreased need for local personnel to perform certain functions. Against this background, if one takes the position that the market jurisdiction(s) should be included in the ‘value creation’-concept, the current methodology of transfer pricing analysis and profit allocation cannot be applied.

In line with the reasoning of the OECD that treating ‘digital’ as separate from more traditional businesses for tax purposes would be difficult, if not impossible, as the whole economy is digitalizing, I will explore reform options than can be applied to all types of businesses, whether or not highly digitalized.

Fairness in Machine Learning

Doctoral research by Marco Favier and supervised by prof. dr. Toon Calders. Started 1 March 2020.

The taxation of artificial intelligence

Doctoral research by Kimberly Van Sande and supervised by prof. dr. Anne Van de Vijver and prof. dr. Bruno Peeters. Started on 13 December 2019.

The world has changed considerably in the last 100 years, especially in the last decades as a result of the digital evolution. The digital evolution seems to be accelerating and has a wide range of tax implications that thwart both direct and indirect taxation. Many countries appear to be struggling with the speed of digital evolution and its tax implications. Tax systems in general are still based on the economic reality of a century ago, which means that digital revenues risk escaping an adequate qualification in civil law, intellectual property law and tax law. One of the central questions is whether international, European and national income tax rules remain 'fit for their purpose' in the age of digital evolution, where new and often immaterial profit generators are being put forward. Physical components seem to be losing their relevance and current tax law appears insufficient to capture income resulting from the digital revolution.  

In this context, legal doctrine worries about the specific challenges that artificial intelligence poses to tax law (e.g. robots in the labour market, automatic cars, chatbots). How will income resulting from artificial intelligence be qualified and allocated under current civil, intellectual property and tax law? Is there a need to modernise traditional tax concepts? Which tax concepts can be developed to contribute to fair taxation? Should artificial intelligence be considered as a separate taxpayer, and if so, what should a tax on artificial intelligence look like?

This study examines the collective term of artificial intelligence, how artificial intelligence would be qualified under current civil and intellectual property law, and how income resulting from artificial intelligence would be qualified and imputed under current tax law. Finally, this research tests the tax treatment of artificial intelligence under current law and in the future, against comparative tax law and philosophical views in law (among others, Adam Smith, Bentham Hanneke Du Preez, Nozick and Rawls).

Tax audits on big data: exploring the legitimacy and limits in light of the prohibition of fishing expeditions

Doctoral research by Liesa Keunen and supervised by prof. dr. Eva Lievens, prof. dr. Bruno Peeters and prof. dr. Sylvie De Raedt. Started in October 2019.

The research project “Tax audits on big data: exploring the legitimacy and limits in light of the prohibition of fishing expeditions” is an FWO project and runs from 2019 to 2023. The main objective is to explore the legitimacy and limits of big data audits for tax purposes, induced from the principle of the prohibition of fishing expeditions in tax matters.

In our increasingly digitised society, tax administrations have started to explore the advantages of data that is shared online or is gathered by companies, such as energy suppliers, providers of telecommunication and payment services. The availability of these so-called “big data” could make the global fight against tax fraud more efficient.

These tax audits on big data have an enormous impact on numerous people: such audits involve a lot of intrinsically private information that becomes available to tax authorities (1) and much of the information concerns individuals that are not involved in any fraudulent action (2).

Against this background, several fundamental legal questions arise with regard to:

  • the prohibition of fishing expeditions. Exploiting big data for tax purposes seems incompatible with this principle, according to which tax authorities are not allowed to search (“fish”) for information, the existence of which is uncertain. This principle seems generally accepted by tax legal scholarship, as well as by legislators and judges. Yet, the prohibition of fishing expeditions is not always interpreted in the same manner. Moreover, there is no explicit legal ground for this principle although it seems so generally accepted.
  • the extent to which the rights to the protection of private life and of personal data can be restricted for taxation purposes. Namely, the gathering of information by the tax authorities, especially on the basis of big data audits, can constitute an interference in the private life in the sense of article 8 ECHR. Article 8 ECHR requires that interferences comply with certain conditions, including necessity and proportionality. These conditions might raise important questions in relation to big data audits for tax purposes. Next to that, the gathering of information by the tax authorities mostly implies the processing of personal data. The requirements of legitimate processing of personal data, laid down in the GDPR, include respect for the principle of fair and lawful processing, data minimisation and purpose limitation, all of which are relevant in this context.

Therefore, the purpose of this research project is to explore the different meanings of the fishing principle to identify whether there is a(n implicit) legal basis and, ultimately, to assess if and under which conditions (keeping in mind the right to privacy and the right to data protection) tax audits on big data are legitimate.

BEPS-Related Technical Assistance in the International Political Economy of Tax Avoidance. A Process-Tracing Analysis to Agency and Discipline in Transfer-Pricing Auditing

Doctoral research by Cassandra Vet and supervised by prof. dr. Danny Cassimon and prof. dr. Anne Van de Vijver (co-supervisor).  Starts in June 2019.

How do state agents contest the structures of a world economy governed through closed communities of expertise? Whereas financial operators work with the complexity of the corporate tax regime to avoid tax obligations, a community of transnational tax experts seem inept to create the institutional change needed to halt the avoidance game (Picciotto, 2013:9). Theories of change, or rather theories about the lack of change, focus mainly on ruling elites associated with the OECD and their expert power, as well as on the distributive conflicts hindering political coordination. Consequently, the majority of agents engaging with the everyday challenges of international tax avoidance remain marginalized. Yet, the corporate tax regime mainly relies on soft power instruments and therefore the willingness of local agents to articulate these norms. Therefore, the aim of this project is to zoom in at local power struggles in developing countries between state agents and representatives of the transnational expert community to analyze how the regime is articulated and contested in the efforts to slow down corporate tax avoidance and how non-dominant players open alternative routes of change in the Global Political Economy of corporate taxation.

Currently, international organizations as well as national governments bolster their efforts to assist developing countries in minimizing the impact of international corporate tax avoidance and integrate developing countries within the international corporate tax regime. These efforts coincide with the global ambition of the BEPS-Project, a project that began when the G20 endorsed the OECD in 2013 to design the content for a multilateral project that would update the principles of corporate taxation and curb tax avoidance. Despite the fact that this project led to a breakthrough by increasing transparency provisions and provides a multilateral tool to update the bilateral framework of Double Taxation Treaties (DTT) ‘s, the project puts forward the same kind of technocratic patch-up solutions that previously failed to bring the principles of taxation in accordance the financialized world economy. Further, a transaction-based logic of auditing is kept in place, a system that is especially cost-intensive and insecure for developing countries. However, the technical assistance projects remain focused on the implementation of these transfer-pricing audits and explicitly serve the purpose of streamlining the responses of developing countries with the BEPS-framework. As a result, the comparative case-study of the impact of technical assistance on the local responses to corporate tax avoidance is an ideal case to investigate the everyday practices of anti-avoidance governance in a local-global setting.

Ability to pay taxes: The future of the ability-to-pay principle in fiscalibus

Doctoral research by Karl Pauwels and supervised by prof. dr. Anne Van de Vijver. Started on 12 March 2018.

Today, a decline in the importance of the (fiscal) ability-to-pay principle can be observed. This decline has two causes. Firstly, the Belgian legislator has introduced taxes as a means to steer people’s behaviour. This excessive desire to use taxes for non-financial purposes has resulted in a deviation from the initial intention of the legislator, which was to levy taxes in accordance with a citizens’ ability to pay. Secondly, different state reforms where local regions gained more fiscal autonomy, have had a negative impact on the functioning of the ability-to-pay principle. Due to the fragmentation of tax competences, it is not easy to levy taxes in a coherent way according to the taxpayer’s ability to pay.

Furthermore, several sociological and technological evolutions have been observed that may have an impact on the ability-to-pay principle.

Therefore, the current status of the ability-to-pay principle in our tax system is rather precarious. Case law of the highest courts in Belgium is relatively scarce and sometimes contradictory, which further fuels the uncertainty with regards to the impact of the ability-to-pay principle.

To address these issues, the ability-to-pay principle will be analysed in a changed legal and sociological context. Particular consideration will be given to digital and technological progress.

The study will analyse the value, the field of application and the scope of this principle. Moreover, it will discuss how the ability-to-pay principle can be put into practice to ensure harmony with other principles on which our tax system is founded (i.a. the ‘polluter pays’-principle, the ‘user pays’-principle and the principle of neutrality), however without subverting the effectiveness of the system itself.

In the end, the aim is to enhance fairness in our tax system. The base assumption for this study is that the ability-to-pay principle contributes to more justice. By exploring and demystifying this principle, the debate on ‘fairness in taxation’ will be more substance.