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1
Öner, Cihat. "Country Note: Analysis of Turkey’s Controlled Foreign Company Regime." Intertax 50, Issue 5 (April 1, 2022): 466–75. http://dx.doi.org/10.54648/taxi2022041.
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This study analyses Turkey’s current position against the policies it has carried out, especially regarding the controlled foreign companies (CFC) taxation regime by the Organization for Economic Cooperation and Development (OECD). As a member of the OECD and G20 during both the preparation and processing of the OECD’s Base Erosion and Profit Shifting (BEPS) Project, Turkey has undertaken various roles. Nevertheless, it is observed that existing CFC rules and current developments regarding Turkey’s CFC regime fall below the minimum standards recommended in the BEPS Action 3 Final Report, and there is a certain ‘resistance’ that continues to regulate some matters. This study seeks to critically analyse and display Turkey’s position for coping with the BEPS Action Plan concerning CFC regulations. Controlled Foreign Company (CFC), Base Erosion and Profit Shifting (BEPS), Turkish Corporate Income Taxation, International Taxation Principles, Tax Avoidance.
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Andresen, Ulf. "Country note: The Failed Representative Office in France: A View from Germany." Intertax 46, Issue 8/9 (August 1, 2018): 709–15. http://dx.doi.org/10.54648/taxi2018074.
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A large number of companies use the so-called representative office (or ‘rep office’) (In the regulated credit industry, the term ‘representative office’ refers to the economic activity in a branch, which, in the absence of a bank license, cannot be lead to postings of banking transactions in its books.) as an organizational form for their foreign activities in particular in the banking or financial services industry. This type of organization below the threshold of the permanent establishment (PE) is, surprisingly, still very popular despite the significant amount of legal uncertainty that it naturally entails; even more so after the measures in Action 7 (OECD, Preventing the Artificial Avoidance of Permanent Establishment Status – Action 7: 2015 Final Report 15, 28 and 42, OECD/G20 Base Erosion and Profit Shifting Project (OECD Publishing 2015).) of the OECD’s Base Erosion and Profit Shifting are gaining traction. The administrative hassle going hand in hand with the need to file tax returns if a PE has been created may be the driving force behind the non-declaration of a PE, hoping at the same time that the business operations carried out in the representative office qualify as preparatory or auxiliary. ‘Hope’, however, is not a very reliable basis for tax planning, as is currently demonstrated by the surge of tax raids in France in a number of representative offices of German companies, banks in particular. This statement will become even more true in the future because the OECD and G20 have thoroughly ‘combed through’ their catalogue of preparatory and auxiliary activities in Action Item 7 of their Base Erosion and Profit Shifting Agenda (OECD, Preventing the Artificial Avoidance of Permanent Establishment Status – Action 7: 2015 Final Report 15, 28 and 42, OECD/G20 Base Erosion and Profit Shifting Project (OECD Publishing 2015).). Consequently, in the future there will probably be no more than a few trees left in the ‘forest’ of potential representative offices. To deal with the issue of representation and its qualification for tax purposes is thus becoming a necessity, be it ex post, in arguing against the assumption of a PE for as many past years as possible, or ex ante, by thoroughly analysing and, if necessary, changing the status quo of the tax declaration of these assumed representative offices. An active management of this matter is essential in particular because the inherent risk of additional tax payments, interest and penalties does not become smaller but larger as the time progresses. Hence, ‘wait and see’ is not a real option. This carries through to the question on how much profit (or loss) would have to be allocated to such PE.
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Wilkie, J. Scott. "Policy Forum: The Way We Were? The Way We Must Be? The Arms Length Principle Sees Itself (for What It Is) in the Digital Mirror." Intertax 47, Issue 12 (December 1, 2019): 1087–102. http://dx.doi.org/10.54648/taxi2019111.
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Under the first pillar, focused on the allocation of taxing rights including nexus issues, several proposals have been made that would allocate more taxing rights to market or user jurisdictions in situations where value is created by a business activity through participation in the user or market jurisdiction that is not recognized in the framework for allocating profits. … Some of the proposals would require reconsidering the current transfer pricing rules as they relate to non-routine returns, and other proposals would entail modifications potentially going beyond non-routine returns. In all cases, these proposals would lead to solutions that go beyond the arm’s length principle (OECD, Addressing the Tax Challenges of the Digitalisation of the Economy – Policy Note, OECD/G20 Base Erosion and Profit Shifting Project 2 (OECD Publishing Jan. 2019). See also, the G20, G20 Leaders’ Declaration: Building Consensus for Fair and Sustainable Development, Buenos Aires Summit (1 December 2018), paragraph 26).
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Mightyn, Alfa, and Arifah Fibri Andriani. "ANALISIS PENERAPAN CONTROLLED FOREIGN COMPANY RULES DALAM MENGATASI BASE EROSION AND PROFIT SHIFTING DI INDONESIA." INFO ARTHA 3 (May 23, 2017): 1–14. http://dx.doi.org/10.31092/jia.v3i0.53.
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One cause for the inability to achieve the expected tax revenue target for some last years was the practice of tax avoidance. One form of tax avoidance is the utilization of Controlled Foreign Company (CFC) to defer the recognition of income from overseas over WPDN capital to be taxed in the country. This practice is also faced by many other countries in the world. The issue of the Base Erosion and Profit Shifting (BEPS) has been of concern to developed and developing countries. G20 countries cooperate with OECD to form a BEPS Project to formulate measures to address these BEPS. Indonesia as one of the Associate Members of the Project BEPS has a position that is parallel to the other OECD countries and participates in implementing the BEPS results. BEPS Project has resulted in BEPS Action Plans which one of them is Action 3: Strengthening CFC Rules. Action 3 will provide recommendations to the domestic law related to the design of CFC Rules. Until now, related to Action 3, BEPS Project has issued a Public Discussion Draft Action 3: Strengthening CFC Rules. This draft is divided into seven "building blocks" required for CFC Rules to be effective. The aim of this study is to analyze the effectiveness of CFC Rules in Indonesia, whether it is sufficient to prevent BEPS. After that, we can determine what steps should be taken by Indonesian tax authorities to strengthen the CFC Rules in Indonesia based on seven dimensions of building blocks. The conclusions of this study are (1) CFC Rules in Indonesia as a whole have not been able to overcome BEPS; and (2) When compared with the recommendations of the Discussion Draft Action Plan 3, CFC Rules Indonesia needs to be improved. However, the necessary improvements should be adjusted to match the needs and characteristics of Indonesia.
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Garbarino, Carlo. "The Impact of the OECD BEPs Project on Tax Treaties: Access, Entitlement and Investment Protection." European Business Law Review 31, Issue 5 (September 1, 2020): 763–98. http://dx.doi.org/10.54648/eulr2020029.
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In recent years aggressive tax strategies lead to a new phenomenon denominated by the OECD as ‘base erosion and profit shifting’ (Beps). The OECD and G20 countries adopted in 2013-15 a 15-point Action Plan to address Beps (the ‘Beps Project’). In respect to tax treaties the OECD adopted in 2016 a Multilateral Instrument and in 2017 issued a new release the Commentary to the OECD Model Tax Convention on Income and on Capital. These changes were approved as part of the Beps Project in Actions 2, 6, 7 and 14. The article describes the Model/Commentary 2017 and looks at the impact of the OECD Beps Pproject on tax treaties in terms of PE access, entitlement and investment protection The article focuses on three main dimensions for a resident of a Contracting State of doing business in the other Contracting State: first, the tests required for doing business through PE (section 2); second, the new set of requirements that need to be met to have full entitlement to the tax treaty (section 3); third, the basic rules for doing business through a corporate vehicle, once the entitlement requirements have been met (section 4). The article concludes with the discussion of tax treaty dispute settlement and enforcement by looking at the mutual agreement procedure, transfer price allocations in tax treaties, and tax treaties and information (section 5). Base erosion, profit shifting, tax avoidance, multilateral tax treaties, OECD Model Tax Convention, BEP s
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Khavanova, Inna A. "Diagnostics of a Tax Benefit in National and International Law (Methodological Aspects)." Taxes 1 (February 18, 2021): 36–40. http://dx.doi.org/10.18572/1999-4796-2021-1-36-40.
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The article is devoted to the aspects of substantiation of tax benefit in transnational operations. The schemes of tax evasion including transnational ones face strong opposition in national legislation, judicial doctrine and provisions of international agreements. In author`s opinion, now the doctrine of unfounded tax benefit is at the new stage of development after the adoption of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation on appraisal by arbitration courts of relevance of gaining of tax benefit by tax residents, dated October 12 № 53. The author examines interaction between internal (Article 54.1 of the Tax Code of the Russian Federation) and international tax rules taking into account new approaches adopted after the OECD/G20 Base Erosion and Profit Shifting Project was realized. Special attention is paid to Multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting particularly to principle purpose test. The author notes that principle purpose test was designed on the basis of legal link between principal purposes of tax payer transaction and object and purpose of international agreement. The nature of such approach can be explained by peculiarities of international agreements for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
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Schmidt, Peter Koerver. "Taxation of Controlled Foreign Companies in Context of the OECD/G20 Project on Base Erosion and Profit Shifting as well as the EU Proposal for the Anti-Tax Avoidance Directive – An Interim Nordic Assessment." Nordic Tax Journal 2016, no. 2 (November 1, 2016): 87–112. http://dx.doi.org/10.1515/ntaxj-2016-0005.
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Abstract Recently, the controlled foreign company (CFC) rules have gained increased attention; as such, rules play an important role in the ongoing efforts of the OECD/G20 and the European Commission with respect to addressing base erosion and profit shifting (BEPS). In this context, the article revisits the CFC regimes of the Nordic countries in order to assess whether these regimes are in line with the recommendations from the OECD/G20 and to determine whether Sweden, Finland, and Denmark, as EU member states, will have to make amendments if the commission’s proposal for an Anti-Tax Avoidance Directive is adopted in its current form. It is concluded that the Nordic CFC regimes in many ways already are in line with the recommendations as well as the directive, but also that certain amendments have to be made.
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Scherleitner, Moritz. "The Imported Mismatch Rule in Light of the Fundamental Freedoms." Intertax 49, Issue 5 (May 1, 2021): 393–407. http://dx.doi.org/10.54648/taxi2021039.
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This article analyses the imported mismatch rule contained in Article 9(3) of the Anti-Tax Avoidance Directive (ATAD) from the perspective of the fundamental freedoms. At the core of the analysis stands the insight that intra-EU payments can trigger the national implementation of the imported mismatch rule. This is not what the drafters of Action 2 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project Action 2 and, thereupon, Article 9 of the ATAD wanted to see. Yet, it became possible due to Member States not applying the anti-hybrid mismatch rules consistently. Imported mismatch, hybrid mismatch, ATAD, ATAD II, EU Tax Law, anti-hybrid, private equity, investment fund.
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Broekhuijsen, Dirk, and Irma Mosquera Valderrama. "Revisiting the Case of Customary International Tax Law." International Community Law Review 23, no. 1 (March 31, 2021): 79–103. http://dx.doi.org/10.1163/18719732-12341459.
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Abstract Customary international tax law has traditionally not received a lot of acclaim in international tax law literature. However, the infrastructure of international tax law is becoming increasingly multilateral. The recent adoption of the Multilateral Instrument and the creation of the Inclusive Framework, two initiatives related to the OECD/G20 Base Erosion and Profit Shifting Project, have accelerated the width of cooperation on international tax matters. For that reason, the authors (re)consider the existence of customary international law in the area of international tax law. They conclude that, perhaps contrary to the intuition of tax lawyers, the evidence in favour of customary international tax law is building up. The question whether customary law exists within the area of international taxation is therefore not misplaced.
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Magwape, Mbakiso. "Debate: Unilateral Digital Services Tax In Africa; Legislative Challenges And Opportunities." Intertax 50, Issue 5 (April 1, 2022): 444–58. http://dx.doi.org/10.54648/taxi2022039.
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As the Base Erosion and Profit Shifting (BEPS) Project attains a significant milestone with 130 Members of the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework agreeing on international tax rules that address digitalization of the economy (Pillar 2), and the UN globally approving its tax treaty on Article 12(B) on automated digital services, a handful of African countries have joined their international counterparts in deviating from the global approach by developing and imposing unilateral digital services tax (DST) policy and legislation. This article examines the rationale of short-term measures of a unilateral DST, particularly in the African context post the COVID-19 pandemic and critically examines legislative measures imposed by a number of African countries. The article then contrasts general and specific challenges (applicable to African countries) in imposing a unilateral DST with opportunities that digital taxation presents for the continent, particularly in developing policy and legislation, and in implementation by tax administrations. DST, Africa, digital economy, tax, ATAF, OECD/G20 Inclusive Framework, BEPS, Pillar II, permanent establishment, allocation rules
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Kleist, David. "A Multilateral Instrument for Implementing Changes to Double Tax Treaties: Problems and Prospects." Intertax 44, Issue 11 (November 1, 2016): 823–30. http://dx.doi.org/10.54648/taxi2016075.
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The Base Erosion and Profit Shifting (BEPS) package developed by the Organisation for Economic Co-operation and Development (OECD) and G20 countries along with developing countries includes a number of measures that, in order for the measures to become fully effective, require changes to be made to the tax treaties of the states involved in the project. As a renegotiation of the tax treaties on a treaty-by-treaty basis would take years, the OECD has initiated the development of a multilateral instrument intended to swiftly implement tax treaty changes agreed on as part of the BEPS Project. Negotiation of the instrument is currently going on and involves about 100 states. This article sets out to describe the background of the multilateral instrument and aims to discuss some difficulties that need to be overcome if the instrument is to become a reality. Furthermore, it aims to provide a high-level analysis of what the instrument may mean in the short and long term.
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Julien, Rita, and Petra Koch. "What Has Changed in the Limitation on Benefits Clause of the 2016 US Model?: Technical Modifications, Policy Considerations and Comparisons with Base Erosion and Profit Shifting Action 6." Intertax 45, Issue 1 (January 1, 2017): 12–37. http://dx.doi.org/10.54648/taxi2017002.
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The Limitation on Benefits (LOB) clause of the US Model Income Tax Convention (US Model) has undergone significant changes in the latest version of the US Model published in February 2016. The aim of this article is to analyse the changes to the LOB clause in the 2016 US Model as compared to its predecessor in the previous 2006 US Model and the LOB clause recommended by the Action 6 Final Report of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. The article first focuses on changes which simultaneously affect multiple tests, namely the changes to the ownership requirements and the changes to the base erosion requirements, which are found throughout the LOB. Second, the article examines two tests which made their way into the US Model for the first time, namely the derivative benefits test and the headquarters company test. It assesses what balance has been struck between the desire to open up and modernize the LOB clause, while maintaining its effectiveness in counteracting treaty shopping. Throughout its detailed study of these changes, it offers lessons that could be taken into account by the Organisation for Economic Co-operation and Development (OECD) in the finalization of its proposed LOB clause under Action 6 and by those states that choose to adopt a detailed LOB provision in their tax treaties in order to meet the minimum standard under Action 6.
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Markey, Bram, and Isabel Verlinden. "From Compliance to the C-Suite: Value Creation Analysed Through the Transfer Pricing Lens." Intertax 44, Issue 10 (October 1, 2016): 774–85. http://dx.doi.org/10.54648/taxi2016069.
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Business models in a global context have evolved at a much speedier pace than the international tax framework. The internet of things, powerful corporate identities, innovative ways to play the market and an increasing reliance on intangibles are vital elements that lead to unprecedented ways of ‘value creation’. The Base Erosion & Profit Shifting (BEPS) project by the Organisation for Economic Co-operation and Development (OECD)/ Group of Twenty (G20) aims at ensuring that profits are effectively taxed where the economic activities generating the profits are performed. This is embedded in the premise that transfer pricing outcomes should be aligned with value creation. Many tax authorities and tax practitioners grapple with interpreting and translating value creation under innovative business models of multinational enterprises (MNEs) to the transfer pricing dictionary. In this article, the authors describe by means of examples how successful companies nowadays create value and unlock ‘economic rent’ across the value chain based on distinctive capabilities and unique business models. The authors subsequently put forward a novel economic approach to grasp value creation from a tax perspective in order to test whether there is a match with the transfer pricing outcomes. They started from the insights shared in ‘Strategy that works’ from PwC Strategy&, a playbook for the C-Suite to close the ‘strategy-to-execution’ gap.
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Obayemi, Olumide. "Country Note: Taxing The Income Of Digital Non-Resident Companies Under The ‘Significant Economic Presence’ (Sep) Rules In Nigeria." Intertax 49, Issue 5 (May 1, 2021): 449–65. http://dx.doi.org/10.54648/taxi2021043.
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The digital economy poses challenges to the traditional international corporate tax rules. Contrary to ‘source rules,’ digital multinational companies (MNCs) – such as Facebook, Netflix, Yahoo, Google, Amazon, etc. – can avoid tax from source/market countries where value is created because they have no permanent establishment (PE) in such countries. This position is damaging to developing countries, including Nigeria, that rely heavily on taxes on revenue sourced within their jurisdictions. Therefore, in January 2020, Nigeria responded by amending its corporate tax rules to introduce the ‘significant economic presence’ (SEP) as an additional basis for taxing digital non-resident companies (NRCs) with Nigerian sourced income. This amendment follows attempts at reforming international tax rules by the United Nations (UN), European Union (EU), and G20/ Organization for Economic Cooperation and Development (OECD). The G20/OECD’s Action 1 of the Base Erosion and Profit Shifting (BEPS) Project and the Inclusive Framework for BEPS seek to provide policy suggestions for aligning the place of taxation with that of ‘value creation’. However, while all countries within the Inclusive Framework are presumed to be operating on equal footing, policy discussions have revealed a well-known problem: the role of international tax principles in the perpetuation of imbalances in the international allocation of taxing rights among states. Against this background, this article will examine the scope of the SEP and its suitability, workability, and sustainability for taxing digital NRCs in Nigeria, review judicial decisions on taxation of digital NRCs, and analyse the enforcement challenges of the SEP in the context of Nigeria’s digital and wider economy. Significant economic presence, digital taxation, value creation, permanent estabilishment, allocation of taxing rights, BEPS, UN, EU, G20/OECD, Nigeria.
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González-Barreda, Pablo A. Hernández. "A Historical Analysis of the BEPS Action Plan: Old Acquaintances, New Friends and the Need for a New Approach." Intertax 46, Issue 4 (April 1, 2018): 278–95. http://dx.doi.org/10.54648/taxi2018030.
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In 2012, public opinion focussed on what has been called ‘aggressive tax planning of multinational enterprises’. Since then, the G20 and OECD developed the Base Erosion and Profit Shifting (BEPS) Action Plan – a phenomenon that has received enormous attention. Despite this attention, the efforts, methodology and outcomes, and the instruments used to implement them, pose very little innovation. This article analyses the issues raised by the BEPS Action Plan from a historical perspective, showing that they remain grounded on the same basis of discussions that took place decades ago. This is probably because the project was triggered by a decrease in tax revenue, and not by an actual study of the failures of the system. The only real innovation of the BEPS Project is the change in the public state of mind and attitude towards tax planning, as well as a totally new way of developing international tax rules through consensus with the participation of a broad number of countries. Future steps should take advantage of this actual innovation, get rid of previous analysis and, taking into account of the current economic situation, study (1) the structure of the tax system and tax burden; (2) the jurisdiction to tax rules and the source and residence principles; and (3) the relationship between private law and tax law, i.e. legal personality and recognition of foreign persons and contracts. Without such in-depth analysis, any changes would be changes that only deepen already existent failing principles forming the base of the current system.
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Faulhaber, Lilian V. "Diverse Interests and International Legitimation: Public Choice Theory and the Politics of International Tax." AJIL Unbound 114 (2020): 265–69. http://dx.doi.org/10.1017/aju.2020.53.
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In her article, Mason concludes that politics – or “bargaining over national interests”— “will play a starring role in determining the outcomes” of the current digital tax project. In this essay, I apply public choice theory to the politics of international tax and argue that two questions can shape our understanding of international tax negotiations and therefore help us predict the outcomes of future international tax reform projects. First, what interests are country delegates representing? Second, how are countries using their involvement in international negotiations to represent these interests? The first question highlights that country delegates are often not defending some agreed-upon “national interest” but are instead often protecting the interests of particular political parties, industries, or taxpayers, which in turn means that interests can change over time and that some voices are missing from debates. The second question highlights that country delegates can engage in international tax negotiations in a variety of ways. They can try to limit what, if anything, the negotiations achieve; they can try to push for more expansive results; and they can use the negotiations to provide international support for their own country's laws. This essay focuses on one particular version of this third type of engagement, where delegates use their country's involvement in an international project to validate and legitimate an idea or proposal that may previously have had little support. I refer to this involvement as “international legitimation,” and I argue that the Organisation for Economic Co-operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) Project shows that delegates who took this approach may have achieved the most long-term success in that their inclusion of little-known provisions or concepts in the international outputs of the BEPS Project ended up leading to these provisions and concepts being adopted by countries around the world.
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Popescu, Cristina Raluca Gh. "Sustainability Assessment: Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital?" Sustainability 12, no. 23 (November 30, 2020): 10004. http://dx.doi.org/10.3390/su122310004.
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Nowadays, sustainability assessment procedures, sustainability assessment indicators, and sustainability assessment models are regarded by specialists as powerful decision-supporting tools able to foster sustainable development worldwide by addressing the main economic, financial, social, and environmental challenges. In like manner, the role and relevance of intangible assets have managed to produce an irreversible change in today’s world which also seriously affected the general traits of our economic systems, leading to a phenomenon known by specialists as the “revolution of intangibles”. Over the last decades, the controversies regarding the recognition and measurement of intellectual capital (IC) have led, on the one hand, to the development of possible solutions and systems for calculating and disclosing the performance generated or stimulated by various components of IC, but, on the other hand, they have also been the main premise that favored the use of intangible assets, in general, and intellectual property (IP), in particular, the transfer of results and the reduction of the tax base by transferring income to tax havens or jurisdictions that do not tax these categories of assets. Against these aggressive methods of fiscal planning, the countries reacted unitarily and coordinated through the BEPS (Base Erosion and Profit Shifting Project) plan. Based on the country’s profile as well as on the results of the annual evaluations published by the OECD (Organisation for Economic Co-operation and Development), our study verifies whether there are premises for IP use for income transfer into favorable jurisdictions and whether the measures and solutions proposed by Action 5 of the BEPS end disputes over the recognition and evaluation of IC. In addition, our work presents a novel methodological framework for sustainability assessment, which focuses on establishing important connections between the recognition and measurement of intellectual capital, the role of sustainability assessment tools, and the implications of corporate social responsibility, since, these days, the real “values” associated with a country or business profile may be found in the intangible assets they possess.
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Andresen, Ulf. "Case Law Note: Arm’s Length Net Income for German Withholding Tax and Tax Declaration Purposes." Intertax 48, Issue 8/9 (August 1, 2020): 831–35. http://dx.doi.org/10.54648/taxi2020081.
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One hundred years after its creation in 1920, (DE: section 49 (1) no. 6 had originally been created as section 2 no. 2 of the ITA 1920; its content had been moved to the current section 49 in 1934: see M. Stöber, W. Anissimov, I. Heß, G. Hiller, T. Kaligin, J-P. Naujok, section 49, no. 1902 in: Income Tax Act, Commentary, (F. Lademann ed. Publisher, 2020; formerly commented on by Jü. Lüdicke). ) section 49 (1) no. 6 and its 1994 derivative no. 2f Income Tax Act (ITA) are becoming the focal point of a heated discussion, primarily among US headquartered multinationals. The reason for this development is that the Big Four, as their auditors, are forcing their audit clients to build reserves for the potential application of sec. 49 (1) no. 6/no. 2f ITA.( For years after 2005, DE: section 49 (1) no. 2f ITA is the only applicable provision as it reflects the change in scope of DE: section 8 (2) Corporation Tax Act to only assume a business activity by nature of a corporate body if such corporate body was subject to unlimited tax liability in Germany. ) The reason is that this provision may apply to a specific type of cross-border intra-group transaction into which US headquartered multinationals have entered. Transactions in scope are the sale or licensing of intellectual property that a larger number of US multinationals have entered into in the aftermath of the introduction of the BEPS measures to the extent that they have a German nexus.(OECD, Final Reports on Actions 1 through 15, OECD/G20 Base Erosion and Profit Shifting Project, (OECD Publishing, 2015), https://www.oecd.org/tax/beps/beps-actions/ (accessed 28 May 2020). These measures have been translated into national tax provisions, e.g. the German ATAD Transformation Act, Bill as of 24 Mar. 2020, and treaty provisions through the OECD, Multilateral Convention to implement Tax Treaty related Measures to prevent Base Erosion and Profit Shifting (OECD Publishing, 2016) (Multilateral Instrument or MLI), available at, https://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-mea sures-to-prevent-beps.htm (accessed 28 May 2020)). Limited tax liability, withholding tax, Germany transfer pricing, taxation at source sale, transfer of intellectual property (IP), licensing of IP, intellectual property, cost plus method, routine patent/trademark registration services.
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Mosquera Valderrama, Irma Johanna. "BEPS principal purpose test and customary international law." Leiden Journal of International Law 33, no. 3 (May 27, 2020): 745–66. http://dx.doi.org/10.1017/s0922156520000278.
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AbstractThe overall aim of this article is to analyse the principal purpose test as an emerging rule of customary international tax law. By means of the principal purpose test, the tax administration can deny the tax treaty benefit if one of the principal purposes of the action undertaken by the taxpayer was to obtain a benefit. This principal purpose test has been developed by the OECD with the political support of the G20 as one of the actions to tackle Base Erosion and Profit Shifting by multinationals (BEPS Project). At the time of writing, 137 jurisdictions including non-OECD, non-G-20 countries have committed to the implementation of the principal purpose test in their current and future tax treaties. Based on the analysis of the objective element (state practice) and subjective element (accepted as law), there are indications that this principal purpose test can emerge as a principle of customary international law. In the past, international tax law scholars addressed the customary international law regarding the OECD/UN tax treaty Models, the OECD Harmful Tax Practices, and the arm’s length principle. However, current international tax developments, including the BEPS Project, call for an analysis of the main elements of customary international law in respect of the principal purpose test, a general anti-avoidance rule that by its own nature, is often general, vague, and imprecise. Therefore, the findings of this article can be useful for generating new areas of research by international public law, international law, and international tax law experts.
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Avi-Yonah, Reuven. "Hanging Together: A Multilateral Approach to Taxing Multinationals." Michigan Business & Entrepreneurial Law Review, no. 5.2 (2016): 137. http://dx.doi.org/10.36639/mbelr.5.2.hanging.
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The recent revelation that many multinational enterprises (MNEs) pay very little tax to the countries they operate in has led to various proposals to change the ways they are taxed. Most of these proposals, however, do not address the fundamental flaws in the international tax regime that allow companies like Apple or Starbucks to legally avoid taxation. In particular, the Organization for Economic Co-operation and Development (OECD) has been working on a Base Erosion and Profit Shifting (BEPS) project and is supposed to make recommendations to the G20, but it is not clear yet whether this will result in a meaningful advance toward preventing BEPS. This article will advance a simple proposal that would allow OECD member countries to tax MNEs based in those countries without impeding their competitiveness. The key observation is that in the twentyfirst century unilateral approaches to tax corporations whose operations span the globe are obsolete, and a multilateral approach is both essential and feasible. The article is divided into five parts. Part III addresses the fundamental question of why corporations should be taxed at all, and what are the implications for taxing MNEs. Part IV advances a proposal to tax MNEs at a reduced rate on all of their global profits on a current basis and outlines some of the advantages from such an outcome. Part V responds to some of the common critiques against this proposal and evaluates it in comparison with alternative proposals. Part VI addresses the implications of the proposal for developing countries. Part VII concludes by evaluating the likelihood that such a proposal may be adopted.
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Abdullah, Sarah Munirah, Nurus Sakinatul Fikriah Mohd Shith Putera, Rafizah Abu Hassan, and Syazni Nadzirah Ya'cob. "Digital Services Tax Laws in Malaysia: A Changing Landscape." Malaysian Journal of Social Sciences and Humanities (MJSSH) 7, no. 11 (November 30, 2022): e001925. http://dx.doi.org/10.47405/mjssh.v7i11.1925.
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The COVID-19 pandemic has accelerated global e-commerce growth and consequently, online transactions have become the new norm. Unfortunately, such digitalisation of the economy has not been adequately captured by the current international tax system as it only requires multinational enterprises to pay tax where production occurs. Therefore, numerous countries have imposed the digital services tax (DST) as an interim measure to address the tax leakage issue due to the expansion of market coverage. DST targets foreign service providers which do not have a physical business presence in jurisdictions where their consumers are located. Nevertheless, the establishment of such a tax has brought about some challenges. Hence, this research examines the structure and operation of DST in Malaysia, as well as the challenges associated with its implementation while contrasting them with the European countries, being the pioneers in DST. The research employs a qualitative method through a doctrinal study of the legal framework that regulates the execution of DST, as well as published works on the subject. The data is then analysed utilising the content analysis approach. Specifically, the findings of this research identify the possibility of a changing landscape in the implementation of DST due to the two-pillar approach approved by the members of the OECD/G20 Inclusive Framework on the Base Erosion and Profit Shifting (BEPS) project. As a result, this research provides a foundation for further research that will analyse the relevance of DST in light of the recent development within the international tax system.
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Lennard, Michael. "Base Erosion and Profit Shifting and Developing Country Tax Administrations." Intertax 44, Issue 10 (October 1, 2016): 740–45. http://dx.doi.org/10.54648/taxi2016063.
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The Organisation for Economic Co-operation and Development (OECD) membership comprises thirty-four countries, and adding G20 countries which are not OECD members gives a total of forty-two countries participating most directly in the base erosion and profit shifting (BEPS) norm setting. There are therefore 151 UN Member countries whose participation in the BEPS process can be seen as relatively peripheral. Their political and representational significance and its relevance to global tax norm setting is often missed by a relevant but incomplete focus on the economic importance of the Group of Twenty (G20). The application to, and adaptation of, the BEPS outcomes to those countries, the likelihood of their commitment to such outcomes, and the way in which any such commitment is likely to find expression in practice are important to businesses economically engaging with such countries. In particular, an awareness of the way in which such countries are likely to view BEPS norm development and implementation, and to add to or depart from it on issues like the taxation of the services economy, should be a necessary part of any business planning, especially for global multinational enterprises (MNEs) seeking to engage with those countries as long-term business and development partners going forward. This article considers some of the key BEPS Actions and ‘Inactions’ in this context.
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Matsuoka, Akira. "What made base erosion and profit shifting project possible?" Journal of Financial Crime 25, no. 3 (July 2, 2018): 795–810. http://dx.doi.org/10.1108/jfc-08-2017-0072.
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Purpose The purpose of this paper is to unveil the true background of the Base Erosion and Profit Shifting (BEPS) Project and to suggest crucial indexes for bringing a movement into a future ceiling causing a struggle of the international tax system. Design/methodology/approach This paper looks into the historical context of this project before and after Starbucks’ scandal, comparing to other contexts of the international tax system. Also, this paper partially reviews BEPS from a legal perspective. Findings The key factors for building momentum of reform of international taxation are a country having a government willing to embrace the cause of reform, unfairness felt toward entities using tax avoidance schemes which other comparable entities could not be use, grass-roots pressure for the reform, effective places to negotiate cooperation among major countries for the reform, solid cooperation among many countries in the world to implement standards and rhetoric of slogan with less opposition. Originality/value The momentum of the reform of international taxation was analyzed before. But the BEPS Project has involved some unique events as compared with the Organization for Economic Cooperation and Development’s project on harmful tax practices, such as initiation of NGOs and boycott by consumers. Additionally, this paper will discuss insights, which the former research did not do.
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Singh, Manoj Kumar. "Taxation of Digital Economy: An Indian Perspective." Intertax 45, Issue 6/7 (June 1, 2017): 467–81. http://dx.doi.org/10.54648/taxi2017039.
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The concepts of taxation, essentially important to any governmental set-up, have been modified over time to suit the rapid changes in the economic system. One such example which could be taken here is that of multinational corporations (MNCs) or business entities operating in several tax jurisdictions. Their income and activities being based in multiple jurisdictions may be liable to tax in all of them but, to adhere to the principles of clarity in law and avoidance of double taxation, various concepts emerged, like that of the Permanent Establishment (PE). Such concepts aim at not only bringing predictability for the taxpayer but to balance the conflicting interests of, mostly, the developed nations and the developing nations. In addition to this, certain jurisdictions provide various tax concessions and benefits which can be manipulated by the tax payers so as to have income rendered untaxed Internet advertising is rapidly growing both in terms of revenue and share in the total advertising market. The volume of internet advertising reached USD 135.4 billion in 2014. The market for internet advertising is projected to grow at a rate of 12.1% per year during the period 2014 to 2019. As the stakes started rocketing, taxing such virtual transactions attained prominence. The existing provisions of the income-tax statute were unable to tie the noose around these transactions. Perhaps the reason is Indian income-tax legislation is still governed by physical presence test. The search for new basis of taxation became inevitable. The question was whether the tax should be on consumption or income? Through the Union budget 2016, the government has put forth a proposal to impose an equalization levy at the rate of 6%. This levy is only on B2B Transactions. The author has discussed the features of the proposed equalization levy as per the Committee and the lacunae in the proposed levy will be looked into. In the course of this article, the author seeks to briefly study the dimensions of digital economy and the problems so faced by the taxation regimes. Various recommendations have emerged from academicians and experts, the most prominent of them being the OECD/G20 Base Erosion and Profit Shifting Project, Action 1: 2015 Report (hereinafter referred to as ‘BEPS Report on Action 1’). The models so proposed under will be studied to understand the limitations. Further, in light of the ‘Equalization Levy’ so proposed by the Union Budget, 2016, the stance of the Indian government will be examined keeping in mind the observations of the Report of the Committee on Taxation of E-Commerce3 released in February 2016 (hereinafter referred to as ‘Indian Committee’). However, the author will not dwell into the issues of compliance and infrastructural requirements for each of the proposed solutions, including the one proposed to be adopted by the Indian Government. The scope is further restricted to taxation on income rather than Value Added Tax (VAT).
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Wu, Hsiu-li, and Shang-Yung Yen. "Base Erosion and Profit Shifting Exploration of Tax Differences and Tax Economics." Journal of Business Theory and Practice 7, no. 4 (October 17, 2019): p155. http://dx.doi.org/10.22158/jbtp.v7n4p155.
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Multinational companies transfer profits to countries with low tax rates via tax planning. In response to the request from G20 nations, the OECD launched a total of 15 BEPS (Base Erosion and Profit Shifting) actions, hoping to prompt the reform in tax systems in different countries. This paper conducts a case study in the examination of taxation differences created by multinational companies by leveraging various tax rates in different countries. Expert interviews are conducted to examine the adjustments and responses of tax planning and investment structures in the corporate world in the wake of the amendments to CFC and PEM tax codes, as well as the correlation between tax revenues and economies. Finally, this paper presents suggestions so that taxes and profits are operated in a fair and efficient environment. This will benefit economic developments and promote effective resources utilization.
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Rigoni, João Marcus de Melo. "A Brazilian View on Base Erosion and Profit Shifting: An Alternative Path." Intertax 42, Issue 11 (November 1, 2014): 730–42. http://dx.doi.org/10.54648/taxi2014066.
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This article argues that notwithstanding the formal invitation made to the OECD by the G20 to propose solutions to the problem of base erosion and profit shifting (BEPS), some countries, for reasons of their own, may prefer to act unilaterally. Brazil is used as a case study as a result of its intense tax policymaking activity in the past twenty years, which has deviated from the OECD's approach. Based on economic data, it is contended that Brazil has been able to design a tax system enabling it to tackle BEPS successfully. This article presents the salient features of the Brazilian tax system as an alternative to the OECD's future proposals, assisting policymakers of other countries - mainly non-OECD members - to redesign their tax system in order to strengthen the legal mechanisms that protect their respective tax bases.
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Wood, Stuart, and Mikael Hall. "Base Erosion and Profit Shifting and Business Restructurings." Intertax 44, Issue 10 (October 1, 2016): 769–73. http://dx.doi.org/10.54648/taxi2016068.
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In anticipation of the release of the new Chapter IX of the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines, this article looks at the potential impact that the outcome of the Base Erosion and Profit Shifting (BEPS) project will have on business restructurings. Specifically, the article examines some of the areas of convergence and divergence between the 2010 version of Chapter IX and the new guidance issued under the BEPS Actions 8–10 Final Reports (Aligning Transfer Pricing Outcomes with Value Creation). Whilst the new guidance arising from Actions 8–10 is anticipated to offer additional clarifications in the area of business restructurings, we note that there are additional areas of complexity which are likely to lead to increased controversy for multinational enterprises (MNEs), with double taxation as an inevitable result.
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Santos, António Carlos dos, and Cidália Mota Lopes. "Tax Sovereignty, Tax Competition and the Base Erosion and Profit Shifting Concept of Permanent Establishment." EC Tax Review 25, Issue 5/6 (November 1, 2016): 296–311. http://dx.doi.org/10.54648/ecta2016030.
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Through a normative and critical analysis, this article aims to study the new concept of Permanent Establishment (PE) suggested in the BEPS Report on Action 7 (Preventing the artificial avoidance of PE status), which was built on proposals put forward in the G20/ OECD’s discussion drafts in the year of 2015. The new definition of PE is crucial in the international tax context, since it determines the right of a country to tax profits of non-residents as well as avoids situations of double taxation. Moreover, nowadays, the PE concept is both obsolete and not in line with the global and digital economy, which justifies our analysis.
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Apriliasari, Vita. "OECD/G20 PILLAR TWO: IS IT A COMPATIBLE AND FEASIBLE SOLUTION?" JURNAL PAJAK INDONESIA (Indonesian Tax Review) 5, no. 2 (December 1, 2021): 136–49. http://dx.doi.org/10.31092/jpi.v5i2.1400.
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This study aims to contribute to the continuing discussion about the compatibility and feasibility of the OECD/G20 Pillar Two measures as a solution to address the remaining base erosion and profit-shifting (BEPS) issues. One triggering such a discussion is the significance of Pillar Two for developing countries. In so doing, a literature review is conducted to gain relevant considerations to the Pillar Two implementation. The analysis lead to the comprehension of the issues surrounding Pillar Two, i.e. justification, complicated design, fairness issues, and effectiveness.
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Chand, Vikram. "Transfer Pricing Aspects of Intra - Group Loans in Light of the Base Erosion and Profit Shifting Action Plan." Intertax 44, Issue 12 (December 1, 2016): 885–902. http://dx.doi.org/10.54648/taxi2016084.
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This article primarily focuses on transfer pricing aspects of intercompany loans. The analysis will take into consideration the current Organisation for Economic Co-operation and Development OECD transfer pricing guidelines as well as the revised transfer pricing guidance issued under the OECD/G20’s Base Erosion and Profit Shifting (BEPS) Action Plan. Moreover, the impact of other BEPS related actions on intercompany loans and their relationship with transfer pricing rules is discussed. Finally, the author concludes by making a suggestion to the OECD to adopt his analysis when providing transfer-pricing guidance on intercompany loans.
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Gupta, Saloni, and Prabhat Mittal. "Base Erosion and Profit Shifting: The New Framework of International Taxation." Journal of Business Management and Information Systems 2, no. 2 (December 31, 2015): 108–14. http://dx.doi.org/10.48001/jbmis.2015.0202009.
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Base Erosion and Profit Shifting (BEPS) refers to a set of tax avoidance practices that deny the tax revenues to a nation by eroding the tax base of the nation where economic activities generating the profits are performed and where value is created, by shifting the tax incidence to locations where no or low taxes are payable (tax havens). BEPS can be achieved through the use of transfer pricing tactics, treaty shopping, digital economy maneuverings and other dubious means. The term BEPS has been used in a project headed by the OECD which produced final reports in October 2015 in response to fifteen action points agreed previously (July 2013). The BEPS project is an attempt by the world’s major economies to rewrite the rules on corporate international taxation so as to address the widespread perception that the corporations, especially MNCs, don’t pay their fair share of taxes. It seeks to ensure that MNCs report profits where economic activities are carried out and value is created.
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Setiabudi, Andang Wirawan, Christianus Yudi Prasetyo, and Jesslyn Huberta Tanada. "KONSTRUKSI MODEL OECD BASE EROSION PROFIT SHIFTING ACTION PLAN 12TH GUNA MEWUJUDKAN TRANSPARANSI PERENCANAAN PAJAK." Jurnal Akuntansi 16, no. 2 (October 29, 2022): 141–57. http://dx.doi.org/10.25170/jak.v16i2.2875.
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This study presents ideas about the construction of policies under the authority of the Directorate General of Taxes (DGT) in response to recommendations issued by the OECD regarding how to deal with aggressive tax planning related to the current era of globalization. The tax avoidance practice is known as the Base Erosion and Profit Shifting (BEPS) which is allegedly rampant by taxpayers (WP), especially for the Multi National Company (MNC). The impact of the BEPS practice is the loss of state revenues experienced by almost every country, especially developing countries. This is a major concern for developing countries because tax revenues are an important component of government revenues to encourage development. The OECD BEPS action plan issued at the G20 meeting in Moscow Russia in July 2013 had 15 action plans. In this case, the Indonesian Government has not implemented all the recommendations for the OECD BEPS action plan. One recommendation that has not been made is the OECD BEPS action plan 12 concerning Mandatory Disclosure Rules (MDR). MDR here is about the disclosure of the company's strategies regarding tax planning. This is necessary because there must be tax planning transparency carried out by WP. This condition is closely related to Human Activity Systems, which are purposeful activities. Therefore the writer studied it with an action-based Soft Systems Methodology (SSM) approach with the category of research interest.
Keywords: BEPS, aggressive tax planning, mandatory disclosure rules, action-based SSM, research interest
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Капустина, Лариса, Larisa Kapustina, Н. Портнов, and N. Portnov. "Review and appraisal of the implementation of OECD initiatives, "the erosion of the tax base and the withdrawal of profits from taxation"." Russian Journal of Management 4, no. 3 (November 2, 2016): 266–70. http://dx.doi.org/10.12737/21953.
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The article describes the key provisions of OECD Base Erosion and Profit Shifting (BEPS) project. The article describes necessities for creation of BEPS. Author analyses possible difficulties of application of BEPS as well as consequences of implementation and possible impact on investment climate of BEPS.
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Baker, Philip. "The BEPS Project: Disclosure of Aggressive Tax Planning Schemes." Intertax 43, Issue 1 (January 1, 2015): 85–90. http://dx.doi.org/10.54648/taxi2015007.
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Action 12 of the Base Erosion and Profit Shifting (BEPS) Action Plan promises the development of new rules on disclosure of aggressive tax planning arrangements. This article examines the meaning of the phrase, the experience of the UK with Disclosure of Tax Avoidance Schemes, and raises some issues about the Organization for Economic Cooperation and Development (OECD) plans in this area.
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Andersson, Krister. "The Business Views on Base Erosion and Profit Shifting and Its Implementation in the Group of Twenty and European Union." Intertax 44, Issue 10 (October 1, 2016): 735–39. http://dx.doi.org/10.54648/taxi2016062.
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To decrease uncertainty and the risk of juridical double taxation, base erosion and profit shifting (BEPS) must be implemented and administered in a uniform way globally. Unfortunately, the European Union (EU) countries have embarked on a diverting path, with additional measures taken and with their own interpretation of some BEPS action points. The Directive (Anti-Tax Avoidance Directive) is furthermore a minimum standard for individual countries to be adjusted as individual Member States see fit. In the United States, on the other hand, there is considerable hesitation to introduce measures not already enacted earlier. Many countries in Asia have adopted a wait and see approach. The new and clarified rules of how to split taxable profit between countries will also be used in administrative procedures like state aid investigations in the EU. The Organisation for Economic Cooperation and Development (OECD), at request of Group of Twenty (G20), is aiming for uniformity but faces a tremendous challenge. An increase in tax disputes between countries is to be expected.
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Kobetsky, Michael. "The Transfer-Pricing Profit-Split Method After BEPS: Back to the Future." Canadian Tax Journal/Revue fiscale canadienne 67, no. 4 (December 27, 2019): 1077–105. http://dx.doi.org/10.32721/ctj.2019.67.4.sym.kobetsky.
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In 2018, the Organisation for Economic Co-operation and Development/Group of Twenty (OECD/G20) Inclusive Framework on base erosion and profit shifting (BEPS): action 10 issued revised guidance on the transactional profit-split method. Regrettably, the revised guidance failed to provide the opportunity for the profit-split method to be more often the most appropriate transfer-pricing method. The revised guidance expressly states that the lack of comparable uncontrolled transactions, by itself, is not a basis for the use of the profit-split method. Under the former guidance, the profit-split method was used infrequently. In the revised guidance, the threshold requirements for the use of the profit-split method are still restrictive. Consequently, it is likely that the profit-split method will rarely be the most appropriate transfer-pricing method. Nevertheless, the residual profit-split method is being considered for BEPS action 1, on the taxation of the digital economy. Two of the proposals under pillar 1 of the Inclusive Framework's 2019 short policy note involve the use of the residual profit-split method to allocate profits. These proposals involve new profit allocation rules that go beyond the arm's-length principle.
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Cottani, Giammarco. "Formulary Apportionment: A Revamp in the Post-Base Erosion and Profit Shifting Era?" Intertax 44, Issue 10 (October 1, 2016): 755–60. http://dx.doi.org/10.54648/taxi2016065.
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In this article, the author analyses the advantages and drawbacks of adopting Formulary Apportionment (FA) as the governing mechanism for the commercial and financial relations between associated enterprises of multinational enterprises (MNE) groups. The author considers the origin of FA, which countries are adopting it, and what its future may be in light of the implementation of the base erosion and profit shifting (BEPS) Action Plan. In particular, the author suggests that international organizations should go more in depth on the analysis of the mechanism, from an empirical as well as a theoretical standpoint, as a by-product on the current work on the application of the profit split method carried out by the Organisation for Economic Cooperation and Development (OECD) in light of the BEPS project.
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Ismah, Nurul, and Agustin Setya Ningrum. "Tinjauan Komprehensif atas Peraturan Pembatasan Interest Deductions and Other Financial Payments di Indonesia." Journal of Applied Accounting and Taxation 5, no. 1 (March 31, 2020): 70–84. http://dx.doi.org/10.30871/jaat.v5i1.1443.
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Tujuan penelitian ini adalah meninjau aspek dalam BEPS Action Plan 4 yang direkomendasikan oleh OECD dan G20 terhadap peraturan terkait pembatasan interest deductions and other financial payments di Indonesia. Penelitian ini juga membandingkan aspek tersebut dengan negara-negara OECD dan G20 serta mengidentifikasi potensi penerapan BEPS Action Plan 4 dalam mengatasi base erosion and profit shifting. Penelitian bersifat analisis kualitatif deskriptif, yang dilakukan melalui wawancara, tinjauan literatur, dan simulasi perhitungan potensi penerapan BEPS Action Plan 4 dengan menggunakan data wajib pajak tahun 2015. Berdasarkan hasil penelitian disimpulkan bahwa peraturan pembatasan interest deductions and other financial payments di Indonesia sudah memenuhi 6 dari 7 aspek, tetapi dalam bentuk pendekatan berbeda. Peraturan perpajakan negara-negara yang ditinjau telah memenuhi aspek-aspek tersebut dengan penyesuaian karakteristik negara. Kombinasi antara fixed ratio melalui DER dan BEPS Action Plan 4 dapat mengatasi praktik BEPS dengan lebih baik karena saling menutupi kelemahan masing-masing pendekatan. Komitmen mengadopsi rekomendasi best practice diperlukan demi terwujudnya kesamaan perlakuan perpajakan melalui harmonisasi peraturan perpajakan di Indonesia dan negara lainnya.
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Malamis, Spyridon E. "The Future of OECD Tax Arbitration: The Relevance of Investment Treaty and WTO Dispute Settlement Practice in Promoting a Gradual Evolution of the International Tax Dispute Resolution System." Intertax 48, Issue 11 (October 1, 2020): 966–82. http://dx.doi.org/10.54648/taxi2020099.
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Unlike the decisive steps that have been made in the international investment and trade regime to promote efficient resolution of pending disputes, in the international tax field, the conventional tax dispute resolution system of state negotiations has vastly remained unchanged ever since its establishment in the beginning of the twentieth century despite the heavy criticism against it by the international business and tax community. Nevertheless, after the introduction of the Anti-Base Erosion and Profit Shifting (BEPS) Project and the recent discussion for the implementation of the Global Anti-Base Erosion (GloBE) Project to further address base erosion and profit shifting and of a novel Unified Approach to address the taxation of the digitalization of the economy, a rapidly changing international tax environment calls for reconsideration of states’ stance towards the implementation of stricter dispute resolution systems in general and of international tax arbitration in particular. By analysing the political objectives of states within the International Tax Dispute Resolution (ITDR) system opposed to the international investment and trade regime through a comparative analysis, this article aims to explore the potential of a gradual evolution of the ITDR in a way that addresses both tax-authorities’ and taxpayers’ interests in a modern economy. The Future of OECD Tax Arbitration: The Relevance of Investment Treaty and WTO Dispute Settlement Practice in Promoting a Gradual Evolution of the International Tax Dispute Resolution System Two.
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Burkhalter-Martinez, Natassia. "BEPS Action 4 and Its Compatibility with the Principle of Non-Discrimination Under Article 24(4) of the OECD Model Convention." Intertax 47, Issue 1 (January 1, 2019): 55–65. http://dx.doi.org/10.54648/taxi2019004.
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The final reports of the OECD Base Erosion and Profit Splitting (BEPS) Project were published in October 2015. The OECD’s recommendations include an approach to address the risks of base erosion and profit shifting caused by the deduction of interest and other financial payments, namely by implementing a fixed ratio rule, which can be complemented by a group ratio rule. The implementation of the BEPS Action 4 recommended approach could lead to certain issues related to its compatibility with domestic law and with tax treaty obligations. This article addresses one of these issues by analysing the compliance of the BEPS Action 4 recommended approach with tax treaty obligations, mainly with the principle of nondiscrimination under Article 24(4) of the OECD Model Convention.
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Gurvich, Evsey, and Ilya Prilepskiy. "G20 and Global Risk Analysis." International Organisations Research Journal 16, no. 2 (June 30, 2021): 55–69. http://dx.doi.org/10.17323/1996-7845-2021-02-04.
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This article studies the work carried out by the Group of 20 (G20) between the global crises of 2008¬–09 and 2020. Active G20 efforts to ensure financial stability and control imbalances helped to mitigate vulnerabilities to crises of the 2008–09 type. Other key achievements included the transition of several G20 members to market-determined exchange rates and the Standard for Automatic Exchange of Financial Account Information as a part of the effort to combat base erosion and profit shifting. However, the G20 proved unprepared for the 2020 crisis, even though G20 leaders had noted the risks linked to infectious diseases in 2015. During the period between the crises, the G20 failed to establish an effective system for analyzing global risks. Indeed, its analysis was mainly adaptive as opposed to forward-looking; no mechanism was formed for controlling policies to manage risks. G20 members’ involvement in the analysis was inadequate, reflecting the consistent pattern of lower incentives for cooperation in the context of comparatively benign global economic conjunctures. Currently, however, the importance of managing global systemic risks is obvious and is reflected in the G20 Action Plan for supporting the global economy through the COVID-19 pandemic. This article presents recommendations for the key elements of this risk management (systematic identification of most probable/destructive vulnerabilities; development of strategies to minimize critical risks and mitigate their possible consequences; monitoring for early warning signs of the most critical vulnerabilities; organizing prompt consultations and adopting swift measures in response to the materialization of globally important risks), including mechanisms for members’ self-accountability and collaboration with international organizations. Management of systemic risks should start with resolving the challenges related to the COVID-19 pandemic: improving public health response systems; promoting structural economic transformations while ensuring prompt return to full employment; and striking the right balance between economic stimulus and macroeconomic stability.
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Rosdina, Haula. "Country Note: Review of Implementation of the Inclusive Framework on Base Erosion and Profit Shifting in Indonesia." Intertax 47, Issue 6/7 (July 1, 2019): 635–51. http://dx.doi.org/10.54648/taxi2019062.
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Tax avoidance by multinational enterprises in Indonesia has led to a massive, ongoing loss of tax revenue. A type of tax avoidance known as base erosion and profit shifting (BEPS) has become a global issue and compelled the OECD to take measures by releasing the BEPS Action Plan and launching the BEPS Project. Indonesia declared its commitment to adopt appropriate parts of the outcome of the BEPS Project for developing countries in Indonesia’s domestic tax rules, recognized as the Inclusive Framework on BEPS or BEPS Minimum Standards. This article analyses the implementation of the BEPS Minimum Standards in Indonesia and how the government has taken action to counteract tax base erosion. The author considers qualitative research and data collected through a literature study and in-depth interviews. Indonesia is in the process of implementing the BEPS Minimum Standards, as addressing transfer pricing issues and preventing tax treaty abuse are currently particular areas of focus for the government.
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Awasthi, Atul. "Transformation of Tax Laws: A Global Perspective." Intertax 45, Issue 2 (February 1, 2017): 175–81. http://dx.doi.org/10.54648/taxi2017014.
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The global outreach of the Base Erosion and Profit Shifting (BEPS) program has surpassed the expectations of many around the world. Significant headway has been made since the Organisation for Economic Co-operation and Development (OECD) was tasked by the G20 leaders to devise a global strategy to deal with the menace of black money and tax evasion. Governments have woken-up to the need of integrated efforts to fight against the mechanisms used by Multinational Enterprises (MNEs) to use loopholes in the tax systems enabling evasion or underpayment of taxes. Enactment of unilateral tax laws; re-negotiation of existing Double Tax Avoidance Agreements (Tax Treaty); inserting anti-abuse provisions within the existing Tax Treaties; entering into agreements for exchange of information, are some of the key measures adopted by the Governments so far. Some of the key developments in the recent past are discussed.
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Merkx, Madeleine. "Fixed Establishments in European Value Added Tax: Base Erosion and Profit Shiftings Side Effects?" EC Tax Review 26, Issue 1 (February 1, 2017): 36–44. http://dx.doi.org/10.54648/ecta2017004.
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The focus in the Organisation for Economic Co-operation and Development (OECD) reports in the Base Erosion and Profit Shifting (BEPS) project is on direct taxation. Still, the effects BEPS will have on indirect taxes should not be underestimated. In this article the author addresses the effects the BEPS reports and developments will have on the concept of fixed establishment (FE) for indirect taxes. She addresses the changes in the concept of permanent establishment (PE) and how these may affect the interpretation of the concept of FE for Value Added Tax (VAT) purposes. On top of that, she discusses whether or not the issues addressed in BEPS for PEs need to be examined in a similar manner for FEs in European VAT.
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Zhao, Lijun, Angelina Karaivanova, and Pengfei Zhang. "The Complementary Role of the WTO in the Enhancement of the Base Erosion and Profit Shifting Project." World 2, no. 2 (May 14, 2021): 267–94. http://dx.doi.org/10.3390/world2020017.
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The current rules on international tax do not function properly due to the gaps which allow for tax manipulation. Whereas most tax agreements largely contribute to the prevention of double taxation, they do not effectively approach double non-taxation matters arising from tax competition based on the agreements’ bilateral nature. In order to tackle this issue, the Base Erosion and Profit Shifting project was introduced. Developed under the Organization for Economic Co-Operation and Development framework, the Base Erosion and Profit Shifting project deals with tax avoidance practices that use mismatches and gaps in tax rules. Nevertheless, the success of this new soft law initiative requires a forum that can promote and enforce its recommendations. The structural nature of the Organisation for Economic Co-operation and Development has led to the consideration of the World Trade Organization to be this forum by many. However, the World Trade Organization covered agreements are drafted in a way that includes some of the tax competition matters but not others, including traditional tax havens. This paper aims to bridge the gaps in the area of the international tax regime. By examining the international trade and international tax regimes, it is shown that there is space for variations in the World Trade Organization broadly drafted agreements for such matters to find a resolution. It is argued that the World Trade Organization can play a complementary role in the enforcement of the new international tax rules.
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Kuzniacki, Blazej. "The Limitation on Benefits (LOB) Provision in BEPS Action 6/MLI: Ineffective Overreaction of Mind-Numbing Complexity Part 1." Intertax 46, Issue 1 (January 1, 2018): 68–79. http://dx.doi.org/10.54648/taxi2018007.
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This comprehensive two-part article addresses the usefulness of the limitation on benefits (LOB) rule in the base erosion and profit shifting (BEPS) Action 6 project and a Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) to prevent abusive treaty shopping – the most prevalent and typical form of treaty abuse. Although a certain flexibility in the prevention of treaty abuse was envisaged by the BEPS Action 6/MLI, only twelve out of the sixty-eight Signatories to the Multilateral Instrument (MLI) have so far chosen to add the MLI’s LOB rule to the principal purposes test (PPT). Such little interest in implementing the MLI’s LOB rule may have something to do with its mind-numbing complexity. Or perhaps tax administrations simply prefer to have more discretionary power under the PPT? This study interrogates this unexplored research area by performing a comprehensive, in-depth analysis of abusive treaty shopping and the MLI’s LOB rule. The overarching question pertains to the effectiveness of the MLI’s LOB rule in the prevention of treaty shopping. In the event of critical findings, de lege ferenda conclusions will follow.
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Avi-Yonah, Reuven S. "A Positive Dialectic: Beps and The United States." AJIL Unbound 114 (2020): 255–59. http://dx.doi.org/10.1017/aju.2020.51.
Full textAbstract:
This essay addresses the interaction between the changes in the international tax regime identified by Mason and U.S. international tax policy. Specifically, I will argue that contrary to the general view, the United States actively implemented the Organisation for Economic Co-Operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) recommendations through the Tax Cuts and Jobs Act of 2017 (TCJA). Moreover, the changes of the TCJA influenced the current OECD effort of BEPS 2.0. Thus, the current state of affairs can be characterized as a constructive dialogue: The OECD moves (BEPS 1), the United States responds (TCJA), the OECD moves again (BEPS 2). If the international tax regime is to survive, it is important that BEPS 2 will succeed, and that the US will then go along and amend the TCJA accordingly. From this kind of positive dialectic, a new international tax regime fit for the twenty-first century may emerge.
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Marres, Otto, and Reinout de Boer. "BEPS Action 2: Neutralizing the Effects on Hybrid Mismatch Arrangements." Intertax 43, Issue 1 (January 1, 2015): 14–41. http://dx.doi.org/10.54648/taxi2015003.
Full textAbstract:
Curbing tax arbitrage is one of the main priorities of the Organization for Economic Cooperation and Development (OECD) (endorsed by the G20 and the G8) ever since the public debate on base erosion fully erupted. Neutralizing the effect of hybrid mismatch arrangements has become Action No. 2 of the OECD Base erosion and profit shifting (BEPS) Action Plan. This has resulted in the recent 2014 deliverable, which is divided into two parts: recommendations for domestic law (part I), and treaty issues (part II). The authors analyse and evaluate the report on the 2014 deliverables on BEPS action point 2. They submit that, given the draw backs of specific anti-hybrid rules as to practical and political feasibility, a further review of alternatives is warranted, particularly with respect to CFC and interest deduction limitations. A more simplified mismatch rule applicable to interest seems particularly worthy of further analysis, given that hybrid mismatch arrangements almost always evolve around interest deduction (a notable exception applies with respect to payments to reverse hybrids; however, effective CFC rules may be effective in countering this particular brand of mismatches). In addition, more generic interest deduction limitations (as opposed to specific hybrid mismatch rules) may be a viable complementary way to mitigate double non-taxation resulting from hybrid mismatches and thus act as a sufficient discouragement for entering into such arrangements.
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Schwarz, Magdalena. "Can the Switch-Over Rule and the Role of Permanent Establishments be considered the Neglected Stepchildren of the GloBE Proposal?" Intertax 49, Issue 12 (December 1, 2021): 986–94. http://dx.doi.org/10.54648/taxi2021100.
Full textAbstract:
As has already been learned as children from the fairy tales of grandparents, neglecting a child or, as is usually the case in these stories, a stepchild, will have long-term negative consequences. However, in the author’s opinion, this seems to be, at least to some extent, what the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has been doing thus far with the role of the switch-over rule (SOR) and permanent establishments in general under Pillar Two of the OECD. This can be seen particularly by the fact that, so far, only minimal information was provided on the concrete design and role of the SOR especially compared to the other three instruments under Pillar Two. The following contribution therefore aims at a more comprehensive examination of the SOR for GloBE purposes and how (low-taxed) permanent establishments are generally dealt with under the GloBE proposal. GloBE, GloBE proposal, switch-over rule, permanent establishment, Pillar Two, income inclusion rule, undertaxed payments rule, subject-to-tax rule, Blueprint, minimum tax.
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Mooij, Hans. "Tax treaty arbitration." Arbitration International 35, no. 2 (March 14, 2018): 195–219. http://dx.doi.org/10.1093/arbint/aiy004.
Full textAbstract:
Abstract Traditionally, tax authorities endeavour to resolve their tax treaty disputes among themselves, by amicable settlement through a mutual agreement procedure (commonly known as ‘MAP’ procedure), without involvement from any third parties—neither arbitrators nor mediators. In past years, due to globalization of countries’ economies and spread of tax treaty networks, the number of disputess, their complexity and revenue interest involved have gone up drastically, exceeding many authorities’ capacities, and resulting in MAP cases taking up increasingly more time, or remaining unresolved at all. It is generally expected that the recent OECD/G20 initiated ‘BEPS’ (short for: Base Erosion and Profit Shifting) measures against international tax avoidance will add further to this. Arbitration so far having been hardly tried in practice, the recent arbitration piece under the BEPS multilateral treaty (MLI) and EU Directive on dispute resolution in international tax matters, however, create new momentum. It is now up to tax authorities if they can accustom themselves to the use of arbitration as an ordinary, and in certain circumstances preferable tool for resolving their disputes.