Legal Loopholes and Global Tax Arbitrage: Implications for Sustanable Development Growth and the Integrity of International Tax Systems

Introduction: This article aims to identify and categorize common hybrid entity arrangements exploited by multinational enterprises (MNEs) to reduce global tax liabilities. Grounded in international tax law and principles of tax equity, the study explores how legal mismatches and regulatory gaps enable aggressive tax planning. Methodology: Using a qualitative, descriptive approach, it examines prominent tax arbitrage strategies that arise from inconsistencies in legal classifications across jurisdictions. Results and Discussion: The analysis identifies five recurring structures: deduction/no inclusion (D/NI), double deduction of interest (DD), local borrowing combined with group loss shifting, reverse hybrids, and shipping-related tax benefits. These arrangements take advantage of legal loopholes and fragmented regulations, undermining the principles of fair tax competition. Conclusion: The findings underscore the pressing need for greater legal harmonization and stronger international cooperation to curb abusive tax practices. By shedding light on these opaque strategies, the research contributes to advancing sustainable development growth and emphasizing the importance of institutional integrity and equitable taxation in the global economy.

Authors

Publication Details

Journal
Journal of Lifestyle and SDGs Review
Published
2025-10-14
DOI
https://doi.org/10.47172/2965-730x.sdgsreview.v5.n08.pe06733
Primary Topic
Corporate Taxation and Avoidance
Type
article
Field-Weighted Citation Impact
0.00
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article

Legal Loopholes and Global Tax Arbitrage: Implications for Sustanable Development Growth and the Integrity of International Tax Systems

Nguyen Van Hieu
Journal of Lifestyle and SDGs Review
Corporate Taxation and Avoidance
article

Legal Loopholes and Global Tax Arbitrage: Implications for Sustanable Development Growth and the Integrity of International Tax Systems

Nguyen Van Hieu
article en

Abstract

Introduction: This article aims to identify and categorize common hybrid entity arrangements exploited by multinational enterprises (MNEs) to reduce global tax liabilities. Grounded in international tax law and principles of tax equity, the study explores how legal mismatches and regulatory gaps enable aggressive tax planning. Methodology: Using a qualitative, descriptive approach, it examines prominent tax arbitrage strategies that arise from inconsistencies in legal classifications across jurisdictions. Results and Discussion: The analysis identifies five recurring structures: deduction/no inclusion (D/NI), double deduction of interest (DD), local borrowing combined with group loss shifting, reverse hybrids, and shipping-related tax benefits. These arrangements take advantage of legal loopholes and fragmented regulations, undermining the principles of fair tax competition. Conclusion: The findings underscore the pressing need for greater legal harmonization and stronger international cooperation to curb abusive tax practices. By shedding light on these opaque strategies, the research contributes to advancing sustainable development growth and emphasizing the importance of institutional integrity and equitable taxation in the global economy.

Journal of Lifestyle and SDGs ReviewVol. 5(8)
Openalex Percentile: Top 57%
Corporate Taxation and Avoidance
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