Stop Saying 'Double Non-Taxation'

It’s time to stop saying “double non-taxation.” Yes, I know what you’re trying to invoke, but there’s no way to keep it from sounding silly—or worse, like something out of 1984.

I also know what you’re going to say: that "untaxed income" doesn’t capture the full meaning, for two reasons. One, “double” refers to two tax authorities, neither of whom is taxing the income from a particular cross-border transaction. Two, “double non-taxation” is a way of turning “double taxation”—formerly the paramount concern of the OECD—on its head, reflecting the new world order after the BEPS plan. (For non-tax types, BEPS refers to the Organization for Economic Cooperation and Development’s plan to stamp out “base erosion and profit shifting.” Clear as mud? I’ll explain below.)

As for the first concern, I think it's being needlessly precise. Most international tax involves two countries, so "untaxed income" is good enough in most cases, and keeps you from sounding ridiculous.

As for the second, I’ll concede that maybe, in the early days of the BEPS project, we could handle a few references to “double non-taxation”—but only from someone whose tongue was planted firmly in cheek. Unfortunately, the term got picked up by enough earnest tax policy reformers that it lost all irony. By the way, “reform” is verboten in Bloomberg news stories, and for good reason—one person’s tax “reform” is another’s worst nightmare.

Which brings me to BEPS. In the old days, the OECD was a lot more trusting of large corporations. Its main goal in the tax area was to ease administration, and it devoted a lot of time and energy to things like clarifying the definition of “permanent establishment” and trying to get countries to remove withholding provisions from their tax treaties. The OECD agreed with businesses that different countries’ tax administrations shouldn’t tax them twice on the same income. To that end, its transfer pricing working party—Working Party No. 6—strove to develop a common approach to transfer pricing. The thinking went that if countries used the same economic analysis, they’d be on the same page in figuring out how much income companies were earning in a particular country, and there would be fewer cases of double tax.

This was all well and good. But as the OECD was figuring out how to help companies avoid paying tax to two countries on the same income, companies themselves were getting very good at not paying much tax anywhere. They adopted increasingly complicated structures—for example, placing their valuable intangible property in low-tax countries and paying royalties to holding companies in those countries. (For a great explanation of some of these structures—all perfectly legal—see a July 22, 2010, report by the U.S. Joint Committee on Taxation, “Present Law and Background Related to Possible Income Shifting and Transfer Pricing,” at

All of this eventually caught the attention of lawmakers, and the Group of 20 countries gave the OECD a new goal: curb aggressive tax planning. This resulted in the BEPS project, a 15-item “action plan” under which not just OECD countries, but a number of developing countries, worked together to develop new rules and treaty provisions with that goal in mind.

“Double non-taxation” got tossed around a lot in the early days of BEPS. This was probably to emphasize the OECD’s new focus, and maybe also to translate that new focus into language familiar to international tax types.

The term “BEPS” was first used in Transfer Pricing Report in a story published May 3, 2012. That’s more than four years ago. Now that we’ve had some time to get used to the OECD’s change in direction, can we please stop saying “double non-taxation”?