Effects of globalization on tax systems

With the increased international mobility of production factors like goods, capital and labor the integration process of worlds economy has speeded up. This change, also called globalization, has affected countries' tax systems along with all other aspects of economy. In this study increased mobility of tax sources as a result of globalization and technological change, and the effects of this transformation on tax systems are considered. In this study we first of all give information about globalization and tax systems, and in light of this information we describe the changes that tax systems are undergoing. To this end we consider concepts such as tax competition, tax heaven, prefential tax regimes, transfer pricing, and difficulty in taxing e-commerce. Lastly we consider changes necessitated by globalization. As a part of this study tax systems employed by various countries before and during globalization are considered and the changes are examined. We also put a light on the effect of globalization on this transformation. As a conclusion of this study we see that globalization has affected tax systems to a large extent. Taxation has evolved from being a national concept into being an international one. As a result countries have lost their ability to act independently in terms of tax systems. As a result of these developments international cooperation in taxation has become more and more important.