During the second half of the twentieth century, the collapse of European Empires increased the number of sovereign states. At the same time, higher taxation and more aggressive regulations by governments of wealthy countries left companies and wealthy individuals seeking offshore homes for capital. In 1948, the Liberian government passed legislation to bring it into this market for offshore services, creating a new channel by which to monetize its sovereignty. The three laws passed in that year established the Liberian shipping registry and created loose corporation and tax laws intending to attract foreign investment.This chapter examines the success of the Liberian shipping registry, which by the 1960s was the largest in the world in terms of tonnage and remained one of the largest in the world even through the collapse of the Liberian state during the civil wars. It contrasts this with the failure of Liberia’s efforts to become a tax haven. This contrast allows for a broader exploration of the "market" for sovereignty and its limits since the middle of the twentieth century. It shows that while, in theory, any state with formal recognition might try to attract capital by committing to lower levels of regulation, this commitment alone is not enough to generate investment and economic development.

Considers the limited scope of tax treaties (i.e., things that tax treaties do not cover). Initially continues in a bilateral scenario investigating mismatches between source and residence countries regarding the fundamental features of payments. These may cause income to disappear or be recognised twice. Particularly considers hybrid entities, hybrid financial instruments, corresponding adjustments and secondary adjustments, as well as BEPS recommendations regarding hybrid mismatch arrangements. The second heading discusses limits inherent in the bilateral nature of tax treaties, particularly when three or more countries are involved (triangular situations). Tax treaties seek to resolve issues of source and residence in bilateral situations. Triangular situations can produce a mismatch of source of income or mismatch of residence of entities. Dual source of income and dual residence are discussed. Finally, re-sourcing and re-characterisation using intermediaries in third countries is considered. Two issues here are use of tax havens and treaty shopping, which are considered from the perspectives of intermediate, source and residence countries. Discusses rules on beneficial ownership, limitation of benefits, most favoured nation and the principal purpose test in tax treaty GAARs, as well as offshore indirect transfers. Responses under the BEPS project are compared to expanding EU rules and case law.