Advance Tax Rulings in Perspective: A Theoretical and Comparative Analysis
Bibliographic record
Abstract
Advance tax rulings are an increasingly common feature of mature income tax systems throughout the world. The Organisation for Economic Co-operation and Development’s (OECD’s) work demonstrates that there has been a trend from 1990 to 2013 among OECD member countries to adopt advance tax rulings regimes. The international expansion of advance tax rulings seems both intuitively desirable and salutary. Upon deeper reflection, both theoretically and empirically, however, there is a puzzle. Why are advance tax rulings regimes so popular? This article makes two contributions to our understanding of advance tax rulings. The first contribution is to highlight that the increased pervasiveness of advance tax rulings internationally is potentially puzzling in the light of Givati’s analysis, which suggests that the balance of strategic considerations facing taxpayers systematically disfavours taxpayers seeking advance tax rulings. Theory thus appears – at least as a preliminary matter – to be out of step with the observed rulings practices tracked by the OECD. We then consider how to resolve the puzzling popularity of advance tax rulings. We find the increased pervasiveness of advance tax rulings regimes should not be entirely surprising despite the apparent conflict with economic theory. To complement the arguments from theory, we offer some tentative evidence that advance tax rulings may not be of any consequence economically speaking. Empirical analyses of panel data of rulings practices published by the OECD do not show any reliable correlations of observed practice with social or economic fundamentals. This finding is consistent with the puzzle posed by economic theory, which suggests that rulings regimes are not likely to be particularly important in practice. This can arise in part due to the relatively slow process for issuing advance rulings compared to the timeframe facing taxpayers to make key business decisions. From an optimistic perspective, advance tax rulings are best regarded as serving an expressive function in support of the rule of law and sound tax administration. Less generously, a cynic might be tempted to say that the resolution to the puzzle posed by the incongruence between theory and practice may be that the best reason to have a binding rulings regime may be because just about everyone else has one.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.002 | 0.004 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.008 | 0.013 |
| Science and technology studies | 0.004 | 0.008 |
| Scholarly communication | 0.007 | 0.007 |
| Open science | 0.001 | 0.003 |
| Research integrity | 0.002 | 0.003 |
| Insufficient payload (model declined to judge) | 0.016 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".