New tax rules could shift profits to where economic activities occur.
The article discusses how international tax policies are changing to ensure that companies are taxed where they actually do business. By following a new economic activity test, companies can benefit from tax treaty benefits and avoid certain anti-abuse rules. However, this may lead to more tax disputes and uncertainty. Despite these changes, multinational companies can still shift profits to low-tax countries. The debate continues on how to fairly allocate taxing rights between countries and prevent profit shifting strategies.