– Conclusions on the DAGTVA transfer pricing calculation –
We have just studied the calculation of transfer prices in the DAGTVA context.
Obviously what was presented to you in the egalisation_des_taxes.xls file is intentionally rudimentary and an MNE has a very complicated tax system.
It is the principle that matters!
You have noticed that in all cases presented and those that you can define as you wish, that the taxes applied to MNEs are proportional to the turnover achieved locally with the main consequence of equalizing them by their distributing, while showing the disparities which could appear in the tax revenues of the States. The latters having, in view of the results, an interest to integrate egalitarian fiscal parameters between them, which makes it possible to struggle, ‘without fight‘, against States qualified as non-cooperative in tax matters.
We have also seen that the tax information pertaining to the transaction was also shared between the tax authorities. This perfect knowledge will allow, if it is justified in a second stage, that certain States return a part of profits perceived and made in other jurisdictions, profits which could not be taken in the State of market for technical reasons. This is one of the goals to be achieved described in the Pillar 1 document.
You could also see that the indirect taxation applied to the transaction, concerning the transfer pricing environment was perfectly neutral, with no financial impact intra-group transactions, which does not penalize either MNEs or international trade with the first consequence, the notion of ‘VAT-group’ disappears with the taxation distributed in each jurdiction in accordance with the local tax laws and the turnover achieved locally.
It should be added that the DAGTVA technical device sets up an environment which obliges, practically without negotiations, a State to comply, without entering into its direct taxation, with what will be imposed on it by the others at the level of indirect taxation and we already know that United States among themselves will perhaps take the opportunity to standardize their divergent internal tax processes. They will impose on the rest of the World and they have already legislated on the subject, which will become, as I called it « World Single Taxation » in the DAGTVA environment.
I can therefore respond positively by providing a solution to the following problems:
- MNEs’ turnover is known to the market state under all possible conditions,
- The DAGTVA technical device is not directly involved in a jurisdiction but requires States to have consensual tax policies,
- B²C transactions are automatically taxed at two levels,
- that of indirect taxation which is recovered by the market state when the MNE is not present in this market (case of digital commerce),
- on the taxation of profits in this situation by balancing the transactional by the granting of international subsidies or by other methods which could be more coercive.
Obviously, the international taxation as described in the DAGTVA proposal and applied to each transaction will not be subject to an individual bank transfer to the State of consumption. The tax authorities after having counted the transactions of their State and grouped those of others, they will set up clearing houses between them to transfer to the beneficiary State, only the positive balance observed. These relations will show the fiscal deficits between the States leading to other adjustment taxes when the time comes if necessary. We then see that it is strictly impossible, as explained in this study, that these sale taxes to be return in the market State are made by exporting companies.
In the DAGTVA truth table , you will find all the missing explanations on the ins and outs of the DAGTVA transfer pricing calculation which may provide a possible answer, among others, to the request made by the G20 to the OECD, find a tax system that can be applied everywhere, as described in the OECD Pillar 1 document. We can nevertheless note that the proposal deviates significantly from what has already been recorded by the OECD and unfortunately it will not be possible to find another tax system that can be pooled while providing the desired simplicity. In any case, the American law following the decision of the Supreme Court of United States in the ‘Wayfair Inc.’ case, will impose itself on the rest of the world, it is therefore on this basis that we must plan to set up a globalized tax system and it is there are no other possible solution.