World Single Taxation EN


Proposal for a Global Taxation System

 – Forewords about a World Single Taxation

By Jean-François Clocheau

Translated in English by author

(The original French version)

 – august 24, 2020 –

Warning: This personal study does not reflect any position of the OECD vis-à-vis the proposal presented.

In the search for a mutualized and fair taxation system that could be proposed and retained by the participants in the G20 in Riyadh in November 2020, the OECD produced, in order to support its work and future conclusions, two documents: “Pillar 1” for an “unified approach” to the problem to be solved and “Pillar 2” which focuses its objectives on combating the observed erosion of the tax bases “GloBE” in Multinational Enterprises (MNEs).

Professor Julien Pellefigue, presents in his thesis and during a course at the faculty, that the volume of transactions of MNEs is so important for the balance of the economy in the World, that very quickly the problem to be solved was focused on possible and desirable actions regarding “Pillar 2”, without even having solved or presented the environment in which this problem was to find its solution in “Pillar 1”.

Any acceptable solution therefore had to take into account what this situation imposes. This is what was retained in the DAGTVA proposal and presented here in the study for the calculation of transfer prices, in order to obtain a healthy taxation between States which cannot call into question the freedom of transactions within these MNEs, but rather seek to balance their distributed activities and focus on making them evolve in a simple, automated and fair international taxation system.

The goal is also to bring back certain States, considered as having tax behaviors penalizing for the others, to return in the straight line of the reason of a mutualized economic development, by attacking as little as possible the international companies which trade there.

As a result, the DAGTVA proposal for a Global Taxation System, it will never enter in the companies which is a private space for the development of wealth, normally managed in the best interests of the participants, although it is no longer still true today!

It is quite obvious that a better taxation for States will impact MNEs on their tax obligations, which will not necessarily be more important, except for those who cheat, but as I have been said, better distributed in the States where they carry out their activities. What will also change for these MNEs, will relate to an incentive to modify their fiscal behavior, by reducing their possibilities for maneuver in a field where the search for maximum profit requires financial and production arrangements that have become today unacceptable. These problemes of taxation application are moreover described in the scenarios in the “Illustrations” of the OECD document “Pillar 1” on pages 13 and 14.

As it is exposed on the DAGTVA website, the indirect taxation and a significant part of direct taxation is definitively applied on the movements of funds corresponding to the regulations of the transaction prices and to the associated tax deductions. It is a transactional tax system, a solution that seems to favor the OECD, which is somewhat similar to the withholding tax on the income of employees.

Tax action is carried out on each transaction and not globally on accounting and tax differentials which could be presented at scheduled deadlines, de facto a posteriori .

To provide an answer to the question of the equal and balance of taxes between States applicable to international transactions, answers must be provided by the OECD for discussion and adoption by the G20 in November 2020 in Riyadh, to be applied in 2021. This is what I am trying to do by participating modestly with this presentation, which is not only a reflection, but the proposal of a technical solution.

Unfortunately, apart from what will be explained to you in this study, it will be strictly impossible to see the birth of another satisfactory solution on the calculation of transfer prices which could lead States to equalize their fiscal actions among themselves. The solution presented is based on a technical approach capable of bringing the expected result in this field after having answered positively on all the 109 questions identified in the document “Pillar 1” and transcribed in the DAGTVA truth table (not translated for the moment). It goes without saying that a single negative response to the 109 headings of “Pillar 1” would make it unfit for its application. The debate remains open for researchers!

If the majority of the questions are asked in the two documents “Pillars 1 & 2” of the OECD, the DAGTVA answer is also based on the work and decisions in United States by the MTC (MultiState Tax Committee), taken by the Working Group of the Executive Committee of the National and Local Taxation (National Conference of State Legislatures Executive Committee Task Force on State and Local Taxation) and the remarks of the report « GLoBE » by the Oxford University Center for Business Taxation.

Although this study was originally dedicated to a request from the OECD, it also provides a single overall and complete positive response, perfectly in line with that expressed by the communication from the Commission to the European Parliament and the Council of Europe, as part of an action plan on fair and simple taxation, by its publication of July 15, 2020. But also the DAGTVA proposal associates the divergent conclusions, with that which the OECD advocates, of the United Nations Committee on the Taxation of Digital Services in its new article 12 B (tax treatment of payments for digital services) defined during the 20th session of June 26, 2020.

By default or as a consequence, all answers given to “Pillar 1” with DAGTVA give an answer to “Pillar 2”. It is for this reason that only the “Pillar 1” document will be studied in this proposal.

Personal thoughts :

Why rely in this study on the work and decisions in the United States of the MultiState Tax CommitteeBecause it would be illusory to want to present an international pooled solution that rules out the world’s largest economy, especially when it is they, United States, which already adopted the solution by a law. We will see why in this study!

But before all action, it is absolutely imperative and “it’s a red line” as William Morris PwC’s Deputy Global Tax Policy Leader said it in a article from July 28, 2020, to remove anything that could slow down the search and acceptance of a solution which, for the moment, is akin to punitive taxation in particular sectors, such as GAFA taxes which are popping up everywhere, while all States are looking for a global solution! We must not attack GAFAs which, of course, apply a questionable interpretation of local legislations, with equally debatable fiscal consequences, but States which allow such behaviors considered to be unfair and non-competitive.

So in the negotiations on the search for international taxation at the OECD, we have the impression, seen from the outside, of finding ourselves on a battlefield on the eve of the armistice where each camp seeks to establish its prerogatives before the peace negotiations! And as William Morris says, there are 137 states that have competing interests in this project!

Before, may be under the threat, they will applied equally unilateral financial retaliatory measures with immediate results, United States withdrew, we hope certainly provisionally, on June 13, 2020 from the OECD talks on taxation about the digital technology, a very specific tax sector, whereas, as I have already written, they are the ones who have the solution, the one advocated by the OECD to see the restitution of sale taxes in market States, with a logical consequence inside the process, to bring the knowledge of the turnover achieved locally, itself subject to another taxation on profits, the main subject of the negociations.

We see, there are two subjects to deal and it may be necessary to proceed in stages. As the first subject provides technical support for the second, with the taxation of digital profits, with or without physical presence of the vendor in the market place, the taxation of profits could be studied in a second stage. But first we have to put in place a system that brings us the knowledge of the turnover achieved and this is precisely what is required in the resolution of the first problem, the restitution of sale taxes in market States.

This is what DAGTVA does by adapting the Wayfair Sale Tax  which I speak below and which will be the basis of this proposal.

Wanting an international agreement on a Global Taxation System on a solution as requested by the G2O, in view of the timetable before the end of the year, will require, due to lack of time, that only a first tranche of agreements be validated, that there is something to sign at this G20, without there being any major negotiations, that the OECD and none of the States present at this G20 leave empty-handed! It is the sale taxes refund process which, you will see in the different pages, does not change the local taxes of each State, so there is practically nothing to renegotiate, it precisely that the States of the United-States have done among themselves with the “Wayfair Sale Tax”, supported by the work of the MultiState Tax Committee, but which may be modified by the DAGTVA tax system, that is presented in this sudy with an adaptation usable not only in U.S. but everywhere.

You will see in the study that it will always be time to wait, secondly, to see the behavior of MNEs faced with this new treatment of taxation as described in the documents of this proposal, to negotiate the taxation of profits subsequently on tangible and indisputable bases.

As I have already written, regarding the first subject, everyone is looking for the solution while this solution is under our eyes and soon practically used all over the United States and Europe from 2021 to 2025 in another form.

I am talking about the « Wayfair Sale Tax   » whose name given follows the decision of the Supreme Court of the United States (SCOTUS) with the judgment 17-494 South_Dakota Wayfair Inc. involving a digital marketplace and the State in which it sells its products.

You will notice with the study of this law, that the decision applies to the whole economy. It is global and does not only involve marketplaces in a digital economy!

So United States and OECD pursue the same goals of seeing taxes returned in market States, but United States has a legislative head start with this law now in effect in over 40 States and organized around MTC work . It is they, United States who must be the first to meet again at the negotiating table for the establishment of the common project to be presented to the G20, as explained in this page « The World Single Market » , written in its first version in June 2019. It should be added that it will be impossible for companies in the rest of the world not to respect a law passed in the United States as you can already see in this document sent to me, in France, by Richard Asquith of Avalara with the title « DAGTVA may be impacted by these new sales tax laws » !

NOTE : The solution contained in the Law 17-494 South_Dakota Wayfair Inc of June 2018 is in fact the first version of DAGTVA presented in Paris in November 2015, on a national transaction where taxes were collected in a city to be returned in another, but with a split payment by the seller’s bank, while in this new DAGTVA version of June 2019, it is the seller’s tax authorities who levy the sale taxes after creation (but in a way that does not penalize the company in its self-financing possibilities). No one present had seen then that if we put a virtual border between the two cities, it would amount to transforming the presentation into a cross-border transaction and levying a tax in one country to return it in another!

Although considered at the time by the participants in the presentation as a little too futuristic, this original split of DAGTVA was technically possible at the national level, but in the absence of a global interbank agreement, which would have been potentially impossible to obtain, made the system DAGTVA process utopian and inapplicable to the world market, as Professor Damien Falco says in his thesis “VAT fraud” in which he plebiscites DAGTVA over 28 pages, a thesis which received two prizes: that of the DALLOZ 2018 theses and the price of the 2019 theses of the Court of Auditors.

Since May 2018, the new version of DAGTVA no longer modifies the functioning of the banking system which was responsible for making the split payment. The new version, which levies sale taxes on the seller’s account by the taxation authorities, under very specific conditions, now makes it possible to use the technical device internationally.


But before to enter in the study, some comments are in order on the environment used.

In the new version from May 2018, “Brexit” was the main environment that supported the development of the DAGTVA solution for the creation of a shared taxation system and that is why, except in the slide show in reference , in most of these on this page, United Kingdom is one of the two States in which part of the transaction takes place. Although this is not the subject of this study, it also shows that the future fiscal relationship between European Union and United Kingdom after December 31, 2020 will not look anything like what is currently being negotiated between the States, in a possible “Brexit Deal”.


For the OECD documents on Pillar 1 “Unified Approach”, the main subject of which should be, as its name suggests, the determination of a unified tax approach , this could be centered on the three of the four major themes or areas that have been identified in the document:

  1. The prerequisites for a unified tax approach – ( 10 occurrences ),
  2. The scope of this unified approach – ( 6 occurrences ),
  3. The new link rules to apply in a shared context – ( 15 occurrences ).

But a fourth major theme appears:

  1. The distribution of the tax rights of MNEs which could be attributed to the “Pillar 2 – GloBE” file – ( 78 occurrences )!

It also seems that there are three main themes missing which are dealt with in other documents on the DAGTVA website. They are :

  1. International taxation when the buyer, with the transaction he has just created by his purchase, is unknown to the tax authorities of the State of consumption,
  2. How to tax the movements of funds linked to the increasing number of transactions between ultimate consumers, in « short circuits »,  »  peer to peer ».
  3. What taxation to apply to the “Uberization” of the economy.

The explanatory text of the OECD “Pillar1” shows that it focuses its attention on the fourth theme with the distribution of taxing rights within MNEs. Even if it is necessary to find a global solution, it is nevertheless the responsibility of each State’s parliament to properly tax these MNEs at the level of each entity but, do they really have the technical means but also, for some, political will?

The global taxation system must then be made so that a State is obliged to use it, in an incentive manner, where it would only find advantages. Some recalcitrant states, such as tax havens, could then decide not to change anything. But the DAGTVA system balances international taxes with a second component which reallocates global subsidies according to the balance observed on the transactional basis. It is a new affectation form applied about the cooperation of States among themselves, highlighting an obvious development differential that would be very prejudicial for recalcitrant States.

If I symbolically criticize the document “Pillar1”, it is because it has been potentially diverted from its primary functions in order to provide, with a majority of 70% of the questions, sought-after fiscal answers on the distribution of various and varied benefits of multinationals, before worrying about technically how it was possible to apply a balanced and pooled tax system between OECD member States and with others as well, which is what the G20, which mandated the OECD, is looking for about this goal.

To do this, “Pillar 1” document (will soon adapted in English with the DAGTVA links) will therefore only serve to define an answer to the questioning of its research areas specified above, but, by natural consequences, it provides obvious solutions which can be applied in the “Pillar 2” document which focuses on the fight against the erosion of tax bases and its organization. It is for this reason that all the answers under the document « Pillar 1 » will implicitly provide those of « Pillar 2 » by the impossibility of dissociating them and it is quite obvious, as I have already said, that the absence of a global response or on a specific subject to “Pillar 1” would prohibit any action to be defined subsequently under “Pillar 2”. It would then follow an impossibility to provide a comprehensive answer to the questions asked in the two documents, in the search for a viable international taxation system.

DAGTVA provides this global response to the pooling of taxation sought by the G20 in Osaka in 2019, without equivocation or ambiguity, which is the result of this study.

DAGTVA work tools :

To support the explanations given in this study and proposal for a Global Taxation System, a reference slide show will be put into a real tax situation, showing the DAGTVA transfer pricing calculation methods in different situations which could be those of the illustrations of the “Pillar 1” document. They refer to files, taken from Microsoft’s Excel spreadsheet, summarizing to the extreme and in the most rudimentary way possible, the calculation of transfer prices with their tax consequences in the DAGTVA environment, both for MNEs and States. All situations are conceivable by changing only a few variables.

Important note : The transactions between companies presented in the spreadsheet may also not take place within an MNE, which makes the technical device applicable in all the conditions of its internationalization but does not authorize, except with the agreement of the taxation authorities (slide show in reference slide 14 ) in accordance with Article 7 of the OECD conventions, to allow an ultimate consumer to export a product that he has sold. Here we see an economy emerging which perhaps exists marginally in C²C but in a form completely unknown to the fiscal parameters currently applied by the tax authorities.

The subject of the restitution of sale taxes in a B²C transaction where an MNE may not have a physical presence in the State of the market is treated for a first approach in this page of June 2019 and in many sections of the truth table.

Documents used :

———— Next in the study ————

The DAGTVA transfert pricing calculation (not yet translated)

Return to the French version of this document


The conclusions about the transfer pricing calculation.

Many pages are not yet translated in English – You can use the automatic Google translator available on the frontpage of the  website.