The globalization of markets
In the last three decades, the expansionary globalization has deepened its model.
A great growth of transnational transactions was accompanied by the rise of e-commerce. This increased exponentially the types of contracts and the possibility of concluding them between companies and people physically distant from each other. It also allowed the diversification of channels of formalization, instrumentation and ways of payment in commercial operations involving two or more jurisdictions.
To this, the consolidation and proliferation of new economic actors on the scene were added. These were multinational companies, non-governmental organizations and supranational entities with different degrees of development and delegated powers (European Union, Pacto Andino, Mercosur).
Their presence changed forever the concept of economic sovereignty as it existed so far.
The division created by the state borders was relativized and thus emerged corporations with negotiation, investment and fiscal planning capacities not seen until then.
The competition for revenue collection and capital flows
The tax administrations needed to readjust their efforts to the volumes and territorial dispersion of the transnational companies, in order to tax these operations and to solve the increasingly frequent and significant conflicts in the application of the rules, taking into account the multiple hierarchies that were incorporated into regulation.
This complex and changing environment implied for States a deepening of the need to cooperate in the field of information exchange.
However, in return, it opened an unexpected scenario of tax competition between administrations, called harmful, as it was described by the O.E.C.D. in a document on the subject dated in 1998.
Conscious of the resulting economic benefits, some jurisdictions began to implement speculative practices by establishing certain fiscal conditions in their domestic legal systems.
This was an intent to offer certain non-resident investors – originators of very high tax rates – a jurisdiction to settle and tax, through different incentives to such establishment.
Thus, some jurisdictions declared non-adherence to international cooperation in the exchange of information for tax purposes.
They denied the provision of information on holdings in bank accounts, assets or operations of companies or individuals under their jurisdiction.
In this way, they sought to implement a policy of attraction of investments based on the strategic design of their taxation.
The measures included, as well, a reduction in aliquots and the establishment of non-taxation benefits for investments from abroad. They also resorted to the signing of special agreements, private and reserved, between the State and large capital contributors, where special taxation conditions were agreed upon (ring-fencing).
A global issue
As a result of this, there were emerging calls for attention from organisations such the O.C.D.E. and the U.E. about the consequences of an escalation of this harmful competition between States, highlighting the effects that such measures could have on local economies and the global market.
Thus came the recommendations for the adoption of the so-called good practices of States and companies (Serrano Palacio, op cit).
Different voices were heard, for and against the discretionary state power to tax operations and the possibility of making it a competitive advantage to attract capital.
But over time, non-collaborative territorial jurisdictions were also unveiled as a haven of assets linked to the most serious issues of International Security.
In part because of this, the majority doctrine reached a new consensus on these non-collaborative jurisdictions. It was accepted that a State could decide sovereignly how much to tax the duty of contribution of its residents but it could not remain opaque in a matter of information exchange. That because the lack of transparency turned them into a refuge of assets from crimes, functional to money laundering and the perpetuation of organized crime structures and terrorist financing.
In reference to those countries that declared themselves transparent in terms of information exchange, the doctrine emphasized the effective fulfillment of the agreements.
That meant such consideration should be given to the effective, and not just the declared, commitment of the duty of collaboration between jurisdictions through the exchange of information.
This, because of certain jurisdictions that had signed agreements and did not comply, in practice, under formal pretexts or delays.
In this way, by the hand of the transformation of the market, the norms of the internal tax law of the States were modified.
This implied the transition from a basically internal model to a markedly regional and international model.
This international system is still under construction and it is experiencing a permanent change that can and should be guided by chosen scenarios, that focus on development, equal opportunity and security.