BEPS

Base Erosion and Profit Shifting – A project of the OECD to curb international income tax planning.

BEPS, Digitalization, Permanent Establishments, Value Creation

(Tax Policy Center of the University of Lausanne, Switzerland) and (Tax Policy Division, Ministry of Finance, India)/ /Leave a comment

The Existing Framework: Nexus and Profit Attribution Rules Under the current Double Taxation Avoidance Agreement (DTAA) framework, business profits are in principle taxable in the State of residence of the enterprise. However, the source (market) jurisdictions may tax the profits if a permanent establishment (PE) is triggered therein. A PE arises when the non-resident operates…

BEPS, International Tax Law, OECD, Tax Avoidance, Tax Policy, Tax Treaties, Uncategorized

(Temple Tax Chambers; King’s College London)/ /Leave a comment

I am delighted to see that my post on value creation has stimulated discussion on the fundamental thinking about international taxation. See the posts of my friends and colleagues Werner Haslehner and Sergio André Rocha. At the IFA seminar in Rotterdam, we puzzled over the meaning of “value creation”. Werner also referred to another mystifying…

BEPS, Digitalization, International Tax Law

(Brazilian Institute for Tax Law (IBDT))/ /Leave a comment

The well-known expression “butterfly effect” comes from chaos theory, and it refers to the idea that a butterfly could flap its wings in Brazil and, through ripple effect, set off a tornado in Texas. Bringing this expression into the tax world, a decision by a domestic court on a seemingly domestic tax matter could trigger…

BEPS, Digitalization, Double Taxation, EU/EEA, Value Creation

(Rio de Janeiro State University, Sergio André Rocha Advocacia & Consultoria Tributária)/ /Leave a comment

For many years, I have been advocating a drastic change in the distribution approach for taxing rights in international taxation. The focus of my criticism has been Article 7 of the OECD and UN Model Conventions.  My core argument continues to be that the so-called “permanent establishment principle” disregards the role of the infrastructure that…

BEPS, Digitalization, OECD, Transfer Pricing, Value Creation

(Luxembourg University)/ /Leave a comment

Following up on Jonathan Schwarz’s latest blog contributing to the debate on taxation and value creation, I wanted to attempt adding some further critical points. The OECD’s stated goal of the second pillar (“Substance”) of its BEPS action plan is to align taxation with value creation. It has already been observed that this is a…

BEPS, Double Taxation, OECD, Permanent Establishments, Tax Treaties

(Tax Lawyer)/ /1 Comment

The importance of the permanent establishment (PE) principle in tax treaties cannot be undermined. Whether or not a source country has the right to tax business profits of a foreign company would depend wholly on the existence or non-existence of a PE of that company in the source country. Work undertaken by the OECD in…

BEPS, MLI, OECD

( PwC Netherlands, Lazarski University and Singapore Management University)/ /Leave a comment

Introduction This is the second part of the input dealing with the MLI’s LOB rule. It focuses on the second and the third subtests under the MLI’s LOB rule, i.e. the concept of income emanating from or being incidental to the taxpayer’s active conduct of business in a State of residence and a State of…

BEPS, Double Taxation, Intangibles, OECD, Tax Policy, Transfer Pricing

(Temple Tax Chambers; King’s College London)/ /Leave a comment

“Those who cannot remember the past are condemned to repeat it” George Santayana, The Life of Reason: Reason in Common Sense (1905). A seminar was held in Rotterdam on 18 May 2018 on “value creation” in the new tax universe to celebrate the 80th anniversary of the International Fiscal Association. An erudite panel, comprising Prof…

BEPS, MLI, OECD

( PwC Netherlands, Lazarski University and Singapore Management University)/ /Leave a comment

Introduction This is the first part of the input regarding the MLI’s LOB. It addresses the active conduct of a business, which constitutes the first subtest under the MLI’s LOB rule. The second part, in turn, will draw attention to the second and the third subtests, i.e. the concept of income emanating from or being…

BEPS, OECD, Tax Policy, Transfer Pricing

(Rio de Janeiro State University, Sergio André Rocha Advocacia & Consultoria Tributária)/ /Leave a comment

Introduction As the General Reporter for the Subject 2 (The Future of Transfer Pricing) of the 2017 IFA Congress in Rio de Janeiro, I joined the plenary session on August 29 in a panel chaired by Luís Eduardo Schoueri and composed of Isabel Verlinden, Jefferson Vanderwolk, Mateus Calicchio Barbosa, Natalia Quiñones, Richard Vann, and Yariv…

BEPS, Double Taxation, MLI, OECD, Residence, Tax Avoidance, Tax Policy, Tax Treaties

(Temple Tax Chambers; King’s College London)/ /3 Comments

Non-inclusion of the Swiss-United Kingdom income tax treaty in the list of Covered Tax Agreements of both the states on signing the BEPS MLI on 7 June 2017 surprised some observers. This evident gap between two OECD member countries was quickly filled by a protocol to the Swiss-United Kingdom treaty concluded on 30 November 2017….

BEPS, OECD, Tax Policy

(Tax Lawyer)/ /3 Comments

On February 1, 2018, Indian Finance Minister presented the country’s latest Budget, which contains an international tax proposal that may not send a positive message to foreign companies doing business with India. The Budget proposes to amend the definition of “business connection” stipulated in Explanation 2 to section 9(1)(i) of the Income Tax (IT) Act…

BEPS, OECD, Tax Policy

( PwC Netherlands, Lazarski University and Singapore Management University)/ /Leave a comment

At the current stage, it is difficult to predict a potential application of the principal purposes test (PPT) and its outcome since it has not entered into force in the 72 Signatories of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). However, assuming that this happens…