Professor Ivan Ozai examines how tax rules built for the physical world are straining in a digital, mobile economy — and helps students understand why these changes matter for governments, businesses, and individuals.

For decades, international tax rules rested on a simple idea: companies pay taxes where they physically operate. In the digital economy, that assumption no longer works.

Technology companies can generate billions from users in countries where they have few employees or offices. Countries around the world have struggled to adapt their tax systems to this reality, experimenting with new approaches to ensure that profits linked to local markets are taxed somewhere. The issue isn’t just about Big Tech — it’s about tax systems built for a more physical economy that are now under pressure in a digital one.

That disconnect intrigues Professor Ivan Ozai, who joined Queen’s Law last summer as the inaugural Faculty Scholar in Tax Law and Policy. His research examines tax competition, tax avoidance and global tax justice — questions that shape how governments fund services and how companies operate in a global market. At the centre is a deceptively simple question: When money crosses borders, who should have the right to tax it?

The challenge becomes sharper in a digital economy. A company can have millions of users in a country without a significant physical presence there.

Wealthier nations are more often home to multinational companies and claim taxing rights as “residence” jurisdictions. Many developing countries instead rely more heavily on “source” taxation — taxing economic activity that takes place within their borders. When that activity is no longer linked to a physical presence, they may collect relatively little revenue from it.

“If you think about Facebook, it doesn’t have to have a physical establishment to be economically present in a country and earn revenue from consumers there,” Ozai says. Under traditional rules, this can limit how much tax the country can collect from profits tied to those users.

Much of international tax law, he explains, still reflects a “single jurisdiction” view — meaning one country claims the primary right to tax income. His research explores whether those rights could be shared instead. Several countries, for example, could divide taxing rights based on factors such as where a company’s owners, workers, or users are located.

This idea becomes even more relevant when considering decentralized autonomous organizations, or DAOs, which Ozai is now studying. These blockchain‑based groups have no headquarters or central management, making traditional tax rules difficult to apply. He explores how taxing rights might be allocated when organizations themselves are diffuse.

“Tax rules built for a brick‑and‑mortar economy don’t work as well in a digital one,” he says. His recent publications — including “Beyond Economic Allegiance,” published in the University of Toronto Law Journal, and “Global Justice in the Reshaping of International Tax,” published in the Journal of International Economic Law — look at how international tax principles might evolve toward fairness and shared responsibility.

Ozai’s interest in taxation began early. Growing up in São Paulo, Brazil, he started working in an accounting firm at 14. He later enrolled in law school and soon became fascinated by the logic behind tax systems.

“Taxes connect all other areas of law because almost anything you do in life has a tax associated with it,” he says. “In family law, issues like inheritance can have tax consequences, and in business, taxes are often a key factor in how transactions are structured.”

After working in private practice and in government in Brazil, he became a tax judge — an experience that helped him see the system from multiple perspectives. It also shaped another part of his research: how courts handle aggressive tax planning, the use of legal structures to reduce taxes in ways lawmakers didn’t intend.

In tax law, there is a key distinction between evasion and avoidance. Evasion is illegal; avoidance is legal but sometimes contrary to legislative purpose. How courts interpret that line can influence the entire tax system. Interpret rules too narrowly, and aggressive planning may flourish; interpret them too broadly, and businesses face uncertainty. Ozai examined that tension in his paper “Judicial Line Drawing and Implications for Tax Avoidance,” published in the Canadian Tax Journal.

At Queen’s Law, Ozai brings these debates into the classroom. Through the Queen’s Colloquium on Tax Law and Policy, an annual series he launched at Queen’s, he invites international scholars to present research in progress to his students. Before each visit, students read the paper and prepare critiques. In class, they introduce the speaker and guide the discussion. Then, they write their own paper, challenging ideas and suggesting solutions to complex tax problems.

The goal is to show how ideas develop through debate and research — and to help students see themselves as contributors to that evolution. “And when students do that, they find they can have a voice,” he says.

As global tax rules continue to shift, Ozai believes that helping students engage confidently with complexity is essential. He hopes they will not only understand the debates shaping the future of taxation but play a part in advancing them.

By Rob Gerlsbeck