'Taxing' TWAIL: A preliminary inquiry into TWAIL's application to the taxation of foreign direct investment

International Community Law Review

Volumn 10, Issue 4, 2008, Pages 389-400

  Kangave, Jalia ^a  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

Author keywords

Development cooperation agreements; Double taxation agreements; International law; Taxation; Third World Approaches to International Law (TWAIL); Third world peoples; Third world states governments

Indexed keywords

EID: 70349144421     PISSN: 18719740     EISSN: 18719732     Source Type: Journal    
DOI: 10.1163/187197308X356921     Document Type: Review

References (61)

1. Anthony Anghie, "Time Present and Time Past: Globalization, International Financialinstitutions and the Third World" 32(2) New York University Journal of International Law and Politics (2000) p. 243
2. See Anthony Anghie and B.S. Chimni, "Third World Approaches to International Law and Individual Responsibility in Internal Conflicts" in The Methods of International Law (2005) Anne Marie Slaughter and Steven R. Ratner (eds.), p. 191 [TWAIL and Individual Responsibility].
3. Makau wa Mutua "Why redraw the map of Africa: a moral and legalinquiry" 16 Michigan Journal of International Law (1995) p. 1113 [Why redraw the map of Africa]
4. James Th uo Gathii "Neoliberalism, Colonialism and International Governance: Decentering the International Law of Governmental Legitimacy" 98 Michigan Law Review (1999'2000) p. 1996 [Neoliberalism, Colonialism and International Governance]
5. Anghie & Chimni, "TWAIL and Individual Responsibility" supra note 2 p. 185.
6. Joel M. Ngugi, "The World Bank and the Ideology of Reform and Development in International Economic Development Discourse" 14 Cardozo Journal of International and Comparative Law (2006) p. 313 [The World Bank and the Ideology of Reform].
7. The phrase 'civilising mission' is used by many TWAIL scholars to refer to the different methods employed by the West to justify intervention in the aff airs of Non-western societies/ "the Other". See, for example, Anghie&Chimni, "TWAIL and Individual Responsibility" supra note 2 p. 192.
8. James Thuo Gathii, "Assessing Claims of a New Doctrine of Pre-Emptive War under the Doctrine of Sources" 43 Osgoode Hall L.J. (2005) p. 67
9. Obiora Chinedu Okafor, "Newness, Imperialism, and International Legal Reform in our Time: A TWAIL Perspective" 43 Osgoode Hall L.J. (2005) p. 171
10. Madhav Khosla, "The TWAIL Discourse: The Emergence of a New Phase" 9 International Community Law Review (2007) p. 294 [The TWAIL Discourse].
11. Madhav Khosla, "The TWAIL Discourse: The Emergence of a New Phase" 9 International Community Law Review (2007) p. 294 [The TWAIL Discourse].
12. Ibironke T. Odumosu, "Locating Third World Resistance in the International Law on Foreign Investment" 9 International Community Law Review (2007) p. 427 [Locating Third World Resistance].
13. Vasuki Nesiah, "The Ground beneath her Feet: "Third World" Feminisms" 4 Journal of Int'l Women's Stud. (2003) p. 30.
14. Seth Gordon, "Indigenous Rights in Modern International Law from a Critical Third World Perspective" 31 Am. Indian L. Rev. (2006-2007) p. 401.
15. The history of tax rebellions demonstrates that resistance is normally against nation states (as opposed to the international community). For literature on tax rebellions, see Danny Burns&Mark Simmons Poll Tax Rebellion (1992)
16. Martin Alfred Larson, Tax Rebellion, USA: Why and How Thousands of Patriotic Americans are Resisting the IRS (1974)
17. Richard Bonney, Political Change in France Under Richelieu and Mazarin, 1624-1661: 1624-1661 (1978).
18. In a number of Third World countries, for example, the income tax threshold is very low, requiring those earning meagre incomes to pay taxes. Some have argued that over time, because of infl ation, these static thresholds have effectively increased tax rates for low income earners. See, for example, PricewaterhouseCoopers Uganda, "Budget Proposal to Government from PricewaterhouseCoopers arising from a Pre-Budget Forum held on 8 February 2007" online: PricewaterhouseCoopers〈 http://www.pwc.com/extweb/ pwcpublications.nsf 〉. On the other hand, the rich can aff ord to engage tax practitioners who assist them in organising their businesses in such a way as to pay the least amount of tax possible. The detailed analysis of tax thresholds and engagement in tax planning schemes is part of my bigger project and beyond the scope of this paper.
19. Examples included: restricting profi t repatriation; technology transfer requirements; creation of jobs for locals; restrictions on foreign property ownership and insisting on joint ventures. See Ha-Joon Chang "Regulation of Foreign Investment in Historical Perspective" The European Journal of Development Research (2004) p. 677 [Regulation of Foreign Investment]
20. and Joseph e. Stiglitz Globalization and Its Discontents (2003) pp. 21, 60-65 [Globalization and Its Discontents].
21. Chang, "Regulation of Foreign Investment" Globalization and Its Discontents Ibid., p 693.
22. Globalization and Its Discontents Globalization and Its Discontents Ibid.p. 689.
23. See generally Chang, Ibid.
24. and Stiglitz, Globalization and Its Discontents supra note 13 pp. 59-67.
25. See Kevin Fletcher, "Tax Incentives in Cambodia, Lao PDR, and Vietnam" p. 6 online: International Monetary Fund 〈http://www.imf.org/ external/pubs/ft/seminar/2002/fdi/eng/pdf/fletcher.pdf〉 [Tax Incentives].
26. See "Uganda - A Distinctly Pro-Business Climate" online Uganda Investment Authority 〈http://www.ugandainvest.com/uia.php'uhpl=why- ugandauhpl1=Why%20Uganda〉.
27. Like locals, foreigners can enter into renewable leases of up to 99 years. While foreigners cannot hold freehold or mailo tenure, in practice, most Ugandans do not either, since most land belongs either to the government or kingdoms.
28. The 1997 Income Tax Act of Uganda repealed the provision of the Investment Code providing for tax holidays. However, while there is no longer any legalinstrument allowing for these holidays, it is believed that in practice, some investors still receive this incentive from Government on an ad hoc basis.
29. Currently, Uganda has DTAs with Denmark, Egypt, India, Italy, Mauritius, Netherlands, Norway, South Africa, United Kingdom and Zambia. Under these Agreements, reduced tax rates apply mainly to dividend, interest and royalty incomes.
30. See Fletcher, "Tax Incentives" supra note 17 pp. 4-6 generally for advantages of tax incentives and counter-arguments on the same.
31. See generally Michael Potton (ICSA), Corporate Financial Management 4thedition pp. 256, 257 for a discussion on factors that drive FDI decisions.
32. Fletcher, "Tax Incentives" supra note 17, p. 12.
33. Tax Incentives Ibid., p. 4.
34. DTAs are also called Income Tax Conventions/ Treaties while DCAs are sometimes referred to as Technical Assistance Agreements.
35. Most DTAs entered into between Uganda and other countries have an "assistance in recovery" provision.
36. See "Convention Between the Kingdom of the Netherlands and the Republic of Uganda for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income" (2006). The provisions guarding against double taxation and discrimination are not unique to the DTA between Uganda and Netherlands and exist in all the ten DTAs that are effective in Uganda.
37. Article 5 (b), "Economic, Technical and Related Assistance Agreement between the United States of America and Uganda" (1971) [Technical Assistance Agreement].
38. Anghie&Chimni, "TWAIL and Individual Responsibility" supra note 2. p. 193.
39. See generally Ngugi, "The World Bank and the Ideology of Reform" supra note 5.
40. The World Bank and the Ideology of Reform Ibid., p. 320.
41. Gathii similarly argues that the nonintervention norm has been applied selectively by the West to exclude economic intervention. See Gathii, "Neoliberalism, Colonialism and International Governance" supra note 3 p. 2030.
42. Balakrishnan Rajagopal, "Counter-hegemonic International Law: Rethinking Human Rights and Development as a Third World Strategy" 27:5 Third World Quarterly (2006) p. 776 [Counter-hegemonic International Law].
43. Technical Assistance Agreement supra note 29.
44. Khosla, "Th e TWAIL Discourse" supra note 7 p. 298.
45. See a similar argument in Fletcher, "Tax Incentives" supra note 17 p. 5. Fletcher argues that these incentives result in a transfer of revenue from the host to the home government.
46. Anghie & Chimni, "TWAIL and Individual Responsibility" supra note 2 p. 191.
47. Gathii, "Neoliberalism, Colonialism and International Governance" supra note 3 pp. 2040, 2046.
48. See Neoliberalism, Colonialism and International Governance Ibid., p. 2043 where Gathii illustrates how, for example, "a nation of Somali peoples ended up in two juridical states, Tanzania and Kenya."
49. See also Mutua, "Why redraw the map of Africa" supra note 3.
50. Indeed pre-colonial Africa had a concept of statehood which was designed on the basis of Kingdoms.
51. See Makau wa Mutua as quoted in Gathii, "Neoliberalism, Colonialism and International Governance" supra note 3 p. 2043.
52. See for example, Rajagopal, "Counter-hegemonic International Law" supra note 33
53. Odumosu, "Locating Third World Resistance" supra note 8.
54. Rajagopal, Locating Third World Resistance Ibid., p. 767
55. See generally Rajagopal, Ibid
56. Odumosu, "Locating Third World Resistance" supra note 8 pp. 427-444. Odumosu defi nes nontraditional actors to include Third World peoples, social movements and NGOs.
57. See Locating Third World Resistance Ibid., p. 435 where Odumosu discusses the manner in which classicalinternational law chooses to treat the state as a government and territory without distinguishing it from its peoples.
58. See examples of literature on resistance at supra note 11
59. See generally, Odumosu, "Locating Third World Resistance" supra note 8 for a discussion on the challenges faced by some non-traditional actors in investment dispute settlement like grassroots movements.
60. See Government of Uganda Budget Speeches, online: Ministry of Finance, Planning and Economic Development 〈http://www.fi nance.go.ug〉. Excise duty rates are, for example, among those that are normally affected. In addition the 2007/2008 budget introduced a Local Services Tax that directly impacts a number of locals.
61. For example, a number of DTAs signed between the North and the Southincorporate portions of the OECD Model Treaty. Also, see the case of Unilever Kenya Limited v The Commissioner of Income Tax, Income Tax Appeal No 753 of 2003 where OECD guidelines on Transfer Pricing were found applicable in resolving alleged transfer pricing issues between Unilever Kenya Limited and Unilever Uganda Limited. Both companies are part of the Unilever group of companies, Unilever plc, a company incorporated in the United Kingdom.