Dr Ciaran O'Flynn

How the State-Professional Service Nexus Helps Create, Sustain, and Reinvent Tax Avoidance Strategies

In this research proposal I argue that the creation, sustenance, and reinvention of so-called ‘BEPS-tools’— aggressive tax planning structures which facilitate base erosion and profit shifting— is rebalancing the structural power dynamic that exists between transnational corporations (TNCs) and offshore financial centre (OFC) states. I contend that the nexus formed of professional services firms and the state within the international tax ecosystem can create a ‘golden cage’, which TNCs find difficult to escape, thus empowering large OFC states to not engage in the beggar-thy-neighbour tax competition, that is, some OFC states are using their structural power strategically. I further argue that this explanation is complementary to extant theories on tax competition and helps better explain the strategies and successes of Conduit-OFCs such as the Netherlands, Ireland, and Switzerland who have well developed professional services ecosystems.