Skip to main content
Revisiting Global Formulary Apportionment
Virginia Tax Review (2010)
  • Susan C Morse, Santa Clara University

This Article examines global destination sales-based formulary apportionment ("DSFA"). It questions whether unilateral U.S. adoption of a DSFA tax would prompt other countries to follow suit, identifying on one hand factors that could encourage a productive capacity shift to the DSFA-adopting jurisdiction and on the other hand origin-based incentives such as business-to-business sales that could encourage the movement of capital investment to jurisdictions other than the adopting jurisdiction. It also analyzes several points of comparison between a globally adopted DSFA tax and the existing separate accounting corporate tax system. These include the potential of transfer pricing and other reform effort to improve the current system baseline; the continued economic dislocation costs of origin-based and cross-border merger incentives under global DSFA; the costs of global negotiation, compliance and administration; and the limitations of a norm of international corporate taxation for the future evolution of the U.S. corporate income tax. As I plan to explore in future work, the uncertainty and inflexibility of outcomes resulting from broad global reform efforts suggests that incremental measures - which could include formulary elements - may provide a better approach to international corporate income tax reform.

  • international tax,
  • formulary apportionment
Publication Date
Citation Information
Susan C Morse. "Revisiting Global Formulary Apportionment" Virginia Tax Review Vol. 29 Iss. 4 (2010)
Available at: