Global Tax Seminar Series – “AI and the Reliance on Decision-Making Tests in the Income Allocation Rules”

The mission of the Global Tax Seminar Series (GTSS) is to provide a regular and convivial forum for the presentation and discussion of new academic tax law, policy, and theory research by colleagues from all continents. The seminars are run in person and online as a Zoom webinar, with 25—to 30-minute paper presentations followed by comments from a distinguished panel of discussants and then ample time for questions and discussion.

On Wednesday 9 December 2026, Richard Collier and Anniek van Elzelingen (University of Oxford) will present on the following topic: “AI and the Reliance on Decision-Making Tests in the Income Allocation Rules”.

Abstract: It has become increasingly clear that artificial intelligence (AI) will have a transformative impact across many aspects of the world as we know it. This includes several important implications for tax systems. This article addresses one specific aspect of the impact of AI on tax systems, namely the challenges created by AI where it is deployed by an MNE to deliver optimised decision-making in the conduct of its business. That situation is highly significant because the existing tax rules that govern the allocation of MNE business income place a very significant emphasis on the location where certain decision-making functions are discharged. Those tax rules do not expressly require that economically significant decisions must be taken by natural persons, but they are structured around the implicit assumption that such decisions are attributable to identifiable decision-makers whose activities can be located within a particular jurisdiction. This raises several challenging questions about the treatment of AI decision-making for the purposes of the income allocation rules.

This article explores these questions, addressing the nature of AI decision-making and analysing the implications of such decision-making for the purposes of the income allocation rules. This includes an exploration of the wider tax policy issues, as well as the related compliance and administration challenges. Many of the issues identified here are illustrative of the wider challenges arising from the interaction between AI-driven business models and existing tax allocation frameworks. The analysis suggests that the deeper issue lies in the extent to which existing decision-making tests rely on identifiable decision-makers in the first place.

Discussants: Eduardo Baistrocchi (LSE), Sol Picciotto (Lancaster University, emeritus TBC), Phil Roper (Partner and National Technical Leader for Transfer Pricing, KPMG UK)

To sign up for the mailing list, please visit: https://www.lse.ac.uk/law/secure/taxation-signup.

For further information, please contact Eduardo Baistrocchi, Associate Professor of Law, at e.a.baistrocchi@lse.ac.uk.

This seminar is open to the public and will operate on a first-come, first-served basis.

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