Treaty shopping and parking of capital and passive incomes in tax havens leads to erosion of the tax base of the countries. Concerns have been raised about the minimization of tax burden by MNEs using legal arbitrage opportunities that arise out of gaps and frictions in the interactions of various domestic laws and / or tax treaties.
The resulting trust among those trading made it possible to make fast, sound decisions, leading to commercial success. However, digitalisation could mean that geographical proximity may become less and less important.