Document Type

Article

Publication Date

2023

Publication Citation

50 Florida State University Law Review 219

Abstract

In 2014, the International Consortium of Investigative Journalists broke the “LuxLeaks” scandal, revealing numerous tax rulings that the press termed “sweetheart deals” granted to multinational companies. Many countries offer tax rulings because they provide certainty to taxpayers and the government on the tax consequences of a planned transaction. Yet, secrecy that is followed by leaks and criticism is a recurring aspect of these rulings, both in the United States and Europe. LuxLeaks, which revealed secret rulings from the small European country of Luxembourg, was international headline news. It helped trigger widespread reforms. Tax authorities, including those of European countries and the United States, now automatically share information about cross-border advance rulings with other countries’ tax authorities. But Luxembourg’s tax rulings otherwise remain confidential. The United States treats a type of tax ruling, the Advance Pricing Agreement (APA), similarly: it exchanges information about APAs with other countries but does not otherwise disclose them. How transparent should tax rulings be? Secret rulings protect taxpayer confidentiality but also impose costs on various stakeholders. This Article (1) draws on the repeated scandals involving tax rulings to develop an original typology of these costs; (2) catalogues the levels of possible rulings disclosure, connecting each level with the costs it would address; and (3) examines potential arguments against rulings transparency. The Article concludes that, despite government resistance, best practices call for public disclosure of anonymized tax rulings—both letter rulings and APAs—heavily redacted, if necessary.

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