17 , 2017-08 , Center for Risk Research (CRR), Shiga University
This study explores dynamics between formation of a tax system and its adaptation by enterprises over a period of time. In particular, the study examines the formation process of the British international tax system, focusing on business interest groups’ political activities and British multinational enterprises’ behaviour from 1914 to 1945. It is clarified that some business interest groups highly influenced the British international tax system. Political activities contributed to legislating Dominion Income Tax Relief in 1920 and concluding the UK–US tax treaty in 1945. However, the British government did not always welcome business interest groups’ political activities. Inland Revenue and the Treasury were particularly reluctant to reduce tax revenue. Additionally, the governmental body always endeavoured to minimise tax relief’s scope. In such a tax environment, British multinational enterprises changed corporate structures, locations, and/or domiciles in some cases. Furthermore, the British overseas engaged in tax planning, identical to contemporary multinationals’ tax planning.