Schmitz Filho, Ricardo Sergio

The study proposes a reimagination of the arm’s length standard, putting forward a series of integrated solutions, based on a combined systematic introduction of both rational business conducts and formula-based alternatives to the arm’s length praxis. This reimagination effort is necessary to tackle the main identified challenges to the different core elements of the arm’s length standard, i.e., rationale, results, compliance requirements, roles and coordination nature, which, as the study demonstrates, render the current arm’s length variant a random and inefficient standard, severely undermining the fulfilment of its roles. With a strong legal theory backbone, but a tax policy orientation, the study assesses both the time and space evolutions of the arm’s length standard, establishing, therefore, the content of and limits to the arm’s length core elements, based on which the proposed solutions are designed, respecting a feasibility framework of implementation, for short-term action.

This master’s thesis examines whether formula-based profit allocation can coexist with the Arm’s Length Principle within the existing structure of international tax law. The research addresses the growing mismatch between traditional transfer pricing rules and the economic realities of highly integrated and digitalized multinational enterprises, where value creation increasingly depends on intangible assets, centralized business functions, and cross-border market participation. The thesis analyzes the doctrinal foundations and operational weaknesses of the Arm’s Length Principle, particularly the limitations of comparability analysis, the instability of the separate entity approach, and the increasing administrative complexity of transfer pricing regulation. In parallel, it evaluates formulary apportionment as an alternative allocation mechanism based on consolidated profits and predetermined economic factors such as sales, assets, and labor. Special attention is devoted to the gradual incorporation of formula-based elements into contemporary international tax reform initiatives. Through analysis of developments in Japan, the United States, and the European Union, the research demonstrates that international taxation is progressively moving toward hybrid allocation models combining transactional and formula-based methodologies. The thesis concludes that formulary apportionment remains incompatible with the Arm’s Length Principle in a strict treaty and doctrinal sense. However, current international reforms indicate an emerging hybrid system in which formula-based mechanisms increasingly supplement traditional transfer pricing rules in areas where arm’s-length analysis no longer produces reliable or economically sound outcomes.

This master's thesis provides a thorough analysis of tax incentives, examining their classification, the policies behind them, focusing on their widespread use by jurisdictions seeking to attract investment. Considering the abusive strategies, which have become widespread in the light of the active use of tax incentives, the urgent need arose to find ways to overcome such a negative tendency. That is why, international community have proposed a “two pillars” solution, that aimed at tackling BEPS and tax avoidance among jurisdictions. This thesis pay particular attention to the genesis of the OECD's Pillar Two framework, peculiarities of GloBE Rules and their impact on existing tax incentives. This research is aim to find ways to safeguard tax incentives and identify existing “safe” tax incentives that still can be implemented by countries to promote genuine economic development in accordance with new tax policy. Despite the numerous limitation and requirements placed on shoulders of countries with the adoption of GloBE Rules, it still remains possible to preserve tax incentives that align with those requirements. For this purpose, every jurisdiction, that desire to stay afloat and still benefit from tax incentives, have to adopt more sophisticated and well-designed incentives that would generate genuine economic activity and align with global tax policy. This master’s thesis serves as a valuable contribution to the continuing discussion about international tax policy by offering policymakers ideas on how to adapt to new developments in post-Pillar Two era.

The master thesis analyses double taxation preclusion between Ukraine and European Union Member States. Exemption and credit double taxation preclusion methods are described alongside their subtypes (full exemption, exemption with progression, full credit, ordinary credit). The analysis establishes that the full exemption method is the most beneficial for taxpayers since it allows them to pay less tax in the residence state, while the ordinary credit is the most burdensome in this regard. The thesis lists particular EU Member States that apply exemption and credit to their taxpayers operating in Ukraine through a permanent establishment. The thesis reveals that Ukraine uses the ordinary credit method for its taxpayers, possessing a permanent establishment in the EU. Subsequently, an author recommends that the Ukrainian legislator implements the full exemption method for those taxpayers who operate in the EU to incentivize their economic presence in the Union.

The thesis is devoted to an analysis of the impact of digitalisation on international taxation and approaches to address the associated problems. The research examines the concepts of source and residence, permanent establishment and its inability to be effective mean for taxation of digital economy. Both coordinated proposal and unilateral measures for expansion of the concept of permanent establishment and implementation of digital service taxes were assess on consistency with the Ottawa Taxation Framework Condition. The research offered an optimal way for taxation of the digital economy, taking into account doctrinal proposals and the establishment of the Global Tax Authority, ensuring effective administration of the international tax system.

This master's thesis defines the nature of the modern international tax system and the generally accepted fundamental principles of the current tax regime. It also investigates the impact and consequences of the digitisation of the economy on current international tax regulation and explores the challenges facing the international community to overcome them. The main elements of the revolutionary Pillar One proposal are revealed, and the main problems that may arise in its implementation are identified. Other possible ways of solving tax challenges are also analysed. This paper raises the question of the ability of the proposed BEPS/G20 Inclusive Framework Pillar One reform to solve the problem of tax avoidance in the jurisdiction of the market where large digital corporations carry out their business activities, bypassing the establishment of a permanent establishment. The study concludes that although Pillar One is an essential and comprehensive work with important aspects, in particular, global support is needed for such large-scale reform. However, there are other, more effective ways to address the tax challenges arising from the digitalisation of the economy. In addition, the implementation of Pillar One depends on overcoming the problems identified in this paper and finding a comprehensive international agreement, which is called into question, and, accordingly, the possibility of the proposal to change the international tax system.