International Tax Policy

In international business, competitiveness is the crux of success, which means every effort has to be made to reduce the cost of production and marketing. Every single penny saved matters a lot and adds to an exporter’s global competitiveness. One such area that needs to be looked into is refund of VAT from the business expenses incurred abroad by the international businessmen. Depending upon the size of business, cost reduction through this method may vary from a few hundred or thousand Euros/Dollars to several million Euros/Dollars. These VAT refunds constitute about 2% to 6% of international business travel-related spending and a large corporation which incurs about $6 Million in international spending could save approximately $1,80,000 through this route. It is interesting to note that with substantial funds locked in VAT refunds, as high as 25% in EU, this particular cost of international business remains unexploited and businesses knowingly or unknowingly have been simply booking VAT expenses as costs and ignoring the real potential of making savings by recovering VAT frequently from the authorities. An attempt has been made in this paper to elaborate upon the various aspects of VAT refunds so that the international businessmen may explore the full potential of such a facility and recover their legitimate dues from the foreign governments and become more competitive in global trading. The paper not only describes the concept of VAT with its background particularly with reference to EU VAT legislation but also underscores the VAT rates, details of recoverable VAT expenses and related matters, required documentation and lists out a few VAT recovery agencies such as VAT Recovery Group (VRG), Corporate VAT Management (CVM), American Express and CVM, Deloitte and CVM, Gelco Expense Management (GEM) and (CVM), and CVM and InterplX, etc. which provide VAT refund services to their corporate clients.

The Organization for Economic Cooperation and Development (OECD) under Base Erosion and Profit Shifting (BEPS) Action 2 indicated that tax arbitrage via hybrid mismatch arrangements “result in a substantial erosion of the taxable bases of the countries concerned” and “have an overall negative impact on competition, efficiency, transparency and fairness.” The relevant action allowing for neutralising the effects of hybrid mismatch arrangements is therefore needed and justified. To achieve that purpose, the OECD developed different anti-hybrid rules under BEPS Action 2. In that regard, however, one may ask whether addressing tax arbitrage via hybrid mismatches as proposed by the OECD is of interest and relevance for developing countries. This paper aims to map that unexplored research area by means of a comparative analysis in four developing countries – Uruguay, Colombia, Brazil, and South Africa.

Multinationale Unternehmen haben viele Möglichkeiten ihre Steuerzahlungen zu minimieren. Dieses Policy Briefing stellt die gängigsten Methoden vor welche Unternehmen zur Steuervermeidung einsetzen. Außerdem stellt der Text bestehende Reforminitiativen der G20, der OECD, und der EU gegen Steuervermeidung vor, und präsentiert Vorschläge für eine wirkungsvollere Bekämpfung von Steuervermeidung durch Unternehmen.

The tax system is central to the operation of states and to the ways in which states interact with individual citizens. Taxes are used by states to fund the provision of public goods and public services, to engage in direct or indirect forms of redistribution, and to mould the behaviour of individual citizens through incentivizing certain activities (such as charitable giving, or investment in new technology) through tax breaks, or to dissuade people from engaging in other activities by means of Pigouvian taxes, including ‘sin taxes’ (such as those associated with the consumption of alcohol or tobacco). Given the absolute centrality of the tax system to some of the main functions of the state, the analysis of conceptual and normative issues relating to taxation should be at the heart of political philosophy. The shape of the tax system is
an unavoidably and irreducibly normative matter, and one which implicates a number of core concerns of social justice.² When we think about issues of social justice in practice, we cannot avoid thinking at the same time about tax.

Given that taxation is one of the most significant mechanisms for interaction between states and individual citizens, it is perhaps surprising that there has not been as much work on taxation within political philosophy as one might have expected. This is not, of course, to say that political philosophy has been silent about tax. But as the chapters in this volume show, there are a number of pressing and significant
philosophical issues relating to the tax system, and these issues often connect in fascinating ways with foundational questions regarding property rights, democracy, public justification, state neutrality, stability, political psychology, and a range of other issues. Many of these deep and fascinating philosophical questions about tax have not always received as much sustained attention as they clearly merit. Our hope
is that this book will advance the debate along a number of these philosophical fronts, and be a welcome spur to further work.
 
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"The global economic scenario seems increasingly characterized by an integrated financial systems resulting from the processes of globalization and liberalization of foreign exchange (with the relative capillary movement of capitals also at transnational level). In addition there is an increasingly diversified spread of banking and quasi-banking services based in tax havens in order to offer the market operational tools to meet various needs, tax evasion included. Operations thus become "off-shore", that is carried out in legal/virtual spaces separating the real path of economic transactions by legal place in which they were conducted, removing the burden of taxation from the place where they actually took place and setting a new geography of movements of capitals completely decoupled from production sites.
That of tax havens is a growing phenomenon and the aim of the paper is to analyze its extent, to understand how this practice is helping to redefine the economic spaces, creating new geographies of financial assets.
"

This article examines certain specific points relating to the protection of the rights of taxpayers within the context of the exchange of information for tax purposes, with emphasis on the Brazilian experience. In this respect, the author considers both automatic exchange and exchange on request.

El presente trabajo busca desarollar los aspectos más resaltantes de la fiscalidad de la asistencia técnica prestada por un no residente hacia el Perú, tanto en la legislación doméstica peruana, como en cuanto a su tratamiento en los CDI suscritos.

Many contemporary social, economical and political studies in the area of taxation do not give any definition of the term tax. Apparently it is assumed that everybody understands what the word tax means. This article discusses the practical application of various definitions of taxes and their often overlooked shortcomings, particularly in the Asian context. The discussion around the term tax is relevant for lawyers, accountants, historians, sociologists, and economists.

Much has been written about the niceties of OECD’s Pillar One and its overall impact on Indian revenues, which is indeed at the heart of the digital tax debate. However, there have been few deliberations around other political, economic and strategic considerations that India needs to pragmatically weigh in and balance as she decides which path to choose. These factors are also important considering India occupies a
unique position in this international tax debate as an emerging economy that sits somewhere in between the small developing nations and the
developed countries. As India agrees to walk the line, this paper evaluates the multilateral consensus-based approach in light of such
political, economic and strategic considerations.

This is the first in a series of articles analyzing international tax
developments and their impact. This article focuses on traditional basic principles and restrictions imposed by international law on a state’s tax jurisdiction and how tax jurisdiction on persons, income and assets is ascertained.

Taxation: Philosophical Perspectives is the first edited collection devoted to addressing philosophical issues relating to tax. The tax system is central to the operation of states and to the ways in which states interact with individual citizens. Taxes are used by states to fund the provision of public goods and public services, to engage in direct or indirect forms of redistribution, and to mould the behaviour of individual citizens. As the chapters in this volume show, there are a number of pressing and significant philosophical issues relating to the tax system, and these issues often connect in fascinating ways with foundational questions regarding property rights, democracy, public justification, state neutrality, stability, political psychology, and a range of other issues. Many of these deep and challenging philosophical questions about tax have not always received as much sustained attention as they clearly merit. Our hope is that this book will advance the debate along a number of these philosophical fronts, and be a welcome spur to further work. The book’s aim of advancing the debate about tax in political philosophy has both general and more specific aspects, involving both overarching issues regarding the tax system as a whole and more specific issues relating to particular forms of tax policy. Serious philosophical work on the tax system requires an interdisciplinary approach—the discussion in this volume therefore includes contributions from a number of scholars whose expertise spans neighbouring disciplines, including political science, economics, public policy, and law.

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My 13 years old niece put me in a difficult position the other day when she asked me to write a speech for a competition at her school on the topic ‘inflation is taxation without legislation’. While I was surprised at the level of questions asked from children in their schools in Pakistan and still Pakistan is struggling to find a place in the future, I was troubled how to address the question. Being totally ignorant on the economics of inflation and having a very little understanding of its interaction (if any) with taxation, I took up the task. An hour of google search with different key words ended up with no help and I decided to deal with it barehanded. With all the over generalisation and simplification, here is what came out of it.

I. Introducción
II. Análisis conceptual
III. El error “ excusable”
IV. El error en el Derecho Penal Tributario
a) Error de hecho
b) El error de derecho penal y extrapenal
V. Tendencias tributarias actuales en materia de error de derecho
a) XIX Jornadas Latinoamericanas de Derecho Tributario
b) VI Jornadas Venezolanas de Derecho Tributario
VI. El error según la doctrina fiscal y la jurisprudencia
a) Opinión de los jueces
b) Opinión del Fisco
VII. Conclusiones
VIII. Bibliografía

The Taxation trend in Western Balkans, 2016 publication is first edition of publication of tax policies and issues  in the Western Balkans countries. The countries that compile the contents of this report are part of Western Balkans and are ranked based in alphabetic order. They  are Albania, Bosnia and Herzegovina, Kosovo, Macedoni, Montenegro and Serbia.

The publication of policies and tax rates, together with the tax incentives for investors show both successful policies and reform challenges, as well as provide a good point of reference for individuals, scholars and businesses to participate in discussion around tax debates across a broader range of issues.

This presentation shows that taxes on capital are not enough to give to the economy the proper incentives if the indirect taxes are not harmonized with the direct taxes. The tax policy on the other hand is only part of the picture when looking at the contribution made to investments and economy.

The objective of this contribution is to provide the OECD – with a view to designing the final 2020 Report-, the EU Institutions –projecting an eventual legislative action- and whatever States – considering or (re)considering unilateral measures in the field of taxation of the digitalized economy- with a decision-making list which could help to better calibrate pros and cons of the several available options (Digital PE, withholding taxes and Equalization Levies)

Duplicity is endemic in the international tax regime as each country tries to secure the best deal it can for itself.  Developed countries continue to demand standards from developing countries that they refuse to apply to themselves, the kind of thinking which has underpinned their standing in many areas of international relations.  For instance, while developed countries continue to condemn the financial services products of many developing countries, accusing them of promoting multinational abuse of the regime by facilitating aggressive tax strategies, developed countries have gradually reduced corporate income tax from the1980s as seen in countries such as France, Germany, Japan, United Kingdom and the United States.  The BVI is one offshore financial centre which has been at the forefront of this international condemnation. Despite lack of any legal foundation, hegemonic condemnation and unrelenting attacks against its financial services industry, globally, by blacklisting and threats of blacklisting in the developed world has forced the BVI to adopt measures and implement policies demonstrating its commitment to a transparent and cooperative offshore finance industry. Sceptics are of the opinion that the BVI continues to facilitate the aggressive tax planning strategies of multinationals and high net worth individuals to avoid paying what they deem to be the fair share of taxes of these multinationals and individuals. However, this is misleading as the last few years have shown. The establishment of its financial services commission, financial investigation agency, international tax authority, etc. and the regulations, policies and other initiatives adopted by these bodies demonstrates a clear commitment to transparency and cooperation in an effort to refute its “tax haven” categorization. The result is that today its industry is better regulated than similar industries in economies which dwarf that of the BVI.  Nevertheless, the territory has not received its due acknowledgement for all its efforts over the years to develop a highly regulated financial services industry, by creating numerous agencies to regulate the industry and training people to staff these agencies at considerable cost to the territory. The work done by agencies such as the FSC, FIA, ITA demonstrates a clear commitment to good governance, cooperation and transparency. Therefore, it can be said that the BVI surpasses its obligations vis-à-vis its foreign counterparts and condemnation of its financial services sector are largely unwarranted.  Thus, rather than condemn the BVI and other offshore financial centres like it, it is the OECD and other international organisations such as the EU, with more resources than the BVI, who should stop playing catch-up and seek to close the loopholes in the international tax regime, used by lawyers and accountants, to facilitate the aggressive tax planning strategies of high net worth individuals and multinational corporations, that border on tax evasion.

This study takes a fresh, thorough look at the interpretation and application of Article 3(2) and submits a new approach that transcends the current controversies and gridlock between the German and English positions into a holistic synthesis that is firmly based on the public international law principles of treaty interpretation enshrined in the Vienna Convention on the Law of Treaties.

Article 3(2) is a rule of interpretation contained in all important model conventions and most effective tax treaties. Despite its importance, the OECD Commentary on it comprises only five paragraphs that do not explain in detail how the provision is to be interpreted and applied. In consequence, the international debate has been intense and led to an update of the Commentary on Article 23 concerning how to treat qualification conflicts. Unfortunately, this has not put the controversies to rest, some of which are not resolved to this day, with plenty of adverse consequences in practice.

It is no exaggeration to say that the ongoing confusion and discord about the interpretation and application of Article 3(2) is one of the central issues plaguing the international tax system, because it is one of the main reasons why unintended double taxation and double non-taxation has persisted over the decades. The international debate continues to be divided into diametrically opposed positions, and the approach implemented by the OECD Commentary is outright rejected even by the courts of some OECD countries. Particularly the views of academics and courts in German-speaking countries (and to some extent in countries with related languages such as Swedish and Dutch) are different from those of the English-speaking world, with neither side accepting any merit in the other side's view.

Hence, the purpose of this study is to clarify the meaning and application of Article 3(2). It maps the entire historical debate on the provision, illuminates flawed assumptions and misunderstandings that have happened in its course, and outlines how these continue to fuel the current controversies. In addition, it provides a comprehensive analysis of German case law concerning the interpretation of tax treaties and examines the extent to which it has been influenced by erroneous views developed in doctrine. Finally, it clarifies the relationship between the article and the Vienna Convention rules on treaty interpretation, the meaning of 'context', and how the condition 'unless the context otherwise requires' is to be applied.

The latter is where the front line currently runs between the German and English views. In my opinion, this is the wrong battle and merely a result of the historical development of the debate, which has progressed without having succeeded in putting the ultimate issue at its core to rest. The result of this is an international barrage of conflicting arguments from all sides without common starting and vanishing point -- a maelstrom of complex controversies in which the unsuspecting novice must drown. This book is meant for all who find themselves at a loss in the midst of the ongoing debates and, worse, take either side without thorough contemplation.

Today, digitalization and accordingly, the digital economy is developing rapidly. With this rapid development, traditional taxation rules are inadequate in the taxation of this area. Countries wishing to take a share from the digital economy are carrying out a number of studies to tax this area. One of these studies is the digital service tax. This study aims to explain the digital services tax which is being implemented from the date of 01.03.2020 in Turkey. In addition, the problems arising from the implemantation of this tax are also discussed in the study.

Resumen: El presente artículo evalúa y plantea una crítica al Proyecto BEPS de la OCDE. En las primeras tres secciones del artículo se expone la lógica conductual de las empresas multinacionales, el contexto económico en el que se plantea la iniciativa BEPS y el desarrollo de las prácticas fiscales nocivas. En las secciones posteriores se aborda tanto los objetivos y principios del plan BEPS, como una evaluación crítica de su desarrollo. Finalmente, se concluye que el plan BEPS tiene defectos estructurales y funcionales que, aunque lo hacen el mejor esfuerzo contemporáneo para contrarrestar BEPS, es insuficiente para contener las prácticas de planeamiento fiscal agresivo por parte de las multinacionales.
Abstract: This article evaluates and proposes a critique on the OECD’s BEPS Project. In the first three sections of the article behavioral logic of multinational companies are exposed, as well as the economic context in which the BEPS initiative arises and harmful tax practices develop. In subsequent sections we approach the objectives and principles of the BEPS plan and also addressed a critique of its development. Finally, we conclude that the BEPS plan has both structural and functional defects, although they are the best contemporary effort to counter BEPS, it is insufficient to curb multinationals aggressive tax planning practices.
Palabras clave: Traslado de beneficios – Erosión de la base imponible – BEPS – Planificación fiscal agresiva – OCDE
Keywords: Profit shifting – Base erosion – BEPS – Aggressive tax planning – OECD

Responding to calls for reallocating taxing rights over multinationals' profits to reflect the place of user value creation, the OECD recently announced a Program of Work to implement international tax reform. I use the European Commission's 2018 proposal to introduce the "significant digital presence" concept into income tax treaties as an example of the type of approach the OECD favors, and argue that it is inferior to recently proposed digital services taxes (DSTs). DSTs directly address the question of where profits should be allocated and taxed, while SDP proposals subordinate this vital question to superfluous treaty conventions. Global tax coordination deserves better focal points.

This paper introduces a new dataset that codes the content of 519 tax treaties signed by low- and lower-middle- income countries in Africa and Asia. Often called Double Taxation Agreements, bilateral tax treaties divide up the right to tax cross-border economic activity between their two signatories. When one of the signatories is a developing country that is predominantly a recipient of foreign investment, the effect of the tax treaty is to impose constraints on its ability to tax inward investors, ostensibly to encourage more investment.

The merits of tax treaties for developing countries have been challenged in critical legal literature for decades, and studies of whether or not they attract new investment into developing countries give contradictory and inconclusive results. These studies have rarely disaggregated the elements of tax treaties to determine which may be most pertinent to any investment-promoting effect. Meanwhile, as developing countries continue to negotiate, renegotiate, review and terminate tax treaties, comparative data on negotiating histories and outcomes is not easily obtained.

The new dataset fills both these gaps. Using it, this paper demonstrates how tax treaties are changing over time. The restrictions they impose on the rate of withholding tax developing countries can levy on cross-border payments have intensified since 1970. In contrast, the permanent establishment threshold, which specifies when a foreign company’s profits become taxable in a developing country, has been falling, giving developing countries more opportunity to tax foreign investors. The picture with respect to capital gains tax and other provisions is mixed. As a group, OECD countries appear to be moving towards treaties with developing countries that impose more restrictions on the latter’s taxing rights, while non-OECD countries appear to be allowing developing countries to retain more taxing rights than in the past. These overall trends, however, mask some surprising differences between the positions of individual industrialised and emerging economies. These findings pose more questions than they answer, and it is hoped that this paper and the dataset it accompanies will stimulate new research on tax treaties.

The Organisation for Economic Cooperation and Development (‘OECD’) is currently considering best practice approaches to designing rules to prevent base erosion and profit shifting (‘BEPS’) by multinational enterprises (‘MNEs’). However, the OECD makes a distinction between combating BEPS and reducing distortions between the tax treatment of various methods of financing. Yet, an unequal tax treatment can create distortions, which incentivises tax planning behaviour.
Accordingly, this paper aims to improve the tax design of anti-avoidance rules governing MNEs’ cross-border intercompany deductions by introducing the concept of the tax-induced cross-border funding bias. To date, the literature has focussed on the debt bias, which arises from the distortion in the tax treatment between debt and equity financing. On the other hand, the funding bias also includes licensing and leasing activities in addition to debt and equity financing. This presents a novel contribution to the literature.
This paper examines the conceptual case for why is might be appropriate and feasible to restrict the tax deductibility of cross-border intercompany interest, dividends, royalties and lease payments given their mobility and fungibility. Specifically, it examines whether it is preferable for MNEs to be subject to economic rent taxation, as is attained through reform proposals such as the Allowance for Corporate Equity (‘ACE’), in this context. This presents a novel proposal for taxing cross-border intercompany economic rents which aligns with the main aim of corporate tax harmonisation; namely: to reduce, if not remove, distortions relating to the taxation of cross-border intercompany activities.

[Please note: This article has first appeared in Australian Tax Forum and has been reproduced with permission from the Tax Institute]

This article is a critical review and as a means of lesson learned for Indonesia taxation system based on the taxation reform undertaken by Norwegian government as a member of welfare state and OECD, that is considered as a country with high tax ratio. It is also a state which has succeed to realize welfare and income distribution without distort domestic economic stabilization. In this article, it is discussed how the Norwegian government fully aware of the role of tax reform as a mandatory task to reach the state objective by optimizing taxation as instrument of social welfare, productivity improvement and stimulus to realize friendly investment environment. Several tax reform agendas such as reduction of corporate income tax, prevention on profit shifting and until the optimization of the use of big data to support the tax reform. Indonesia on its tax reform agenda which has been commenced in 1983 has transformed significantly for many aspects such as administrative affairs and the way the government to implement the tax policy. These measures have aligned with global tax trend. However, several works remain such less optimize tax ratio during the last one decade.

Artikel ini merupakan critical review sekaligus sebagai sarana pembelajaran bagi sistem perpajakan di Indonesia atas reformasi sistem perpajakan yang dilakukan oleh pemerintah Norwegia sebagai salah satu dari kelompok negara welfare state yang oleh OECD dinilai berhasil memiliki tax ratio yang cukup tinggi sekaligus mampu menciptakan pemerataan penghasilan tanpa mendistorsi kegiatan ekonomi domestik. Dalam artikel ini diuraikan bagaimana pemerintah Norwegia memahami sepenuhnya bahwa reformasi pajak merupakan suatu keniscayaan untuk mencapai tujuan negara yaitu menggunakan instrumen pajak sebagai instrumen pemerataan sosial, peningkatan produktivitas dan stimulus untuk mewujudkan lingkungan ekonomi yang ramah terhadap investasi. Beberapa agenda reformasi yang diulas seperti kebijakan penurunan tarif pajak penghasilan korporasi, pencegahan terjadinya profit shifting hingga pengoptimalan penggunaan teknologi dan big data dalam sistem perpajakan. Indonesia dalam perjalanan reformasi perpajakan sejak 1983 telah mengalami perubahan yang cukup signifikan baik dalam hal administrasi dan implementasi kebijakan pajak sesuai dengan tren reformasi perpajakan global. Namun, catatan penting dalam perjalanan reformasi perpajakan Indonesia adalah masih rendahnya tingkat kepatuhan dan masih rendahnya tax ratio Indonesia dalam kurun waktu satu decade terakhir.

Automatic exchange of information (AEoI) for tax purposes has become the global standard for international tax cooperation in 2013. As a tool for containing offshore tax evasion, it has encountered opposition in the past and continues to be fraught with challenges. This paper recapitulates the rationale for AEoI, including estimates on the magnitudes of assets held offshore, with a specific focus on Turkish assets held in Germany (chapter 1). Subsequently, chapter 2 summarises the recent history and describes the processes and milestones until breakthrough for global AEoI in 2013. Chapter 3 then discusses three current challenges, including the de facto exclusion of developing countries; how to incentivise recalcitrant jurisdictions to participate, such as the USA; and issues around the implementation of the CRS, including OECD’s Global Forum of Transparency and Exchange of Information, the peer reviews and public statistics. Chapter 4 concludes.

This article aims to offer the first structural analysis of tax disputes under institutional instability using a core element of the international tax regime as an example. It offers a theory grounded on Mancur Olson's seminal contribution to group dynamics, the logic of collective action. It also suggests implications of this theory that might help to address key enforcement issues faced by the international tax regime in a frequent context worldwide: institutionally unstable countries.

FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE- Transitional Input Value Added Tax


FACTS:
Petitioner was a real estate developer that bought from the national government a parcel of land that used to be the Fort Bonifacio military reservation. At the time of the said sale there was as yet no VAT imposed so Petitioner did not pay any VAT on its purchase. Subsequently, Petitioner sold two parcels of land to Metro Pacific Corp. In reporting the said sale for VAT purposes (because the VAT had already been imposed in the interim), Petitioner claimed transitional input VAT corresponding to its inventory of land. The BIR disallowed the claim of presumptive input VAT and thereby assessed Petitioner for deficiency VAT.