– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|39||Rights to impose Residents & Subsidiaries – UN / OECD Article 7/8/9.||Pillar 1||8||28||RBRfa|
24. Once it is determined that a country has a right to tax profits of a non-resident enterprise (RBNar), the next question is how much profit the rules allocate to that jurisdiction. This matter is currently answered by Article 7 (Business Profits) of both the OECD and United Nations Model Tax Conventions.
25. In the case of a resident enterprise transacting with its own affiliates, countries have taxing rights over the profits of that enterprise (RBRfa) in accordance with Article 9 (Associate Enterprises).
The enforcement of this right to tax profits has always posed a complicated tax problem related to intra-MNE billings and re-invoices, sometimes passing through multiple jurisdictions, so that the accounting results end up revealing only ridiculously taxable profits.
With DAGTVA this “accounting and fiscal noria” can no longer exist because at each stage of invoicing, which may be intra-MNEs, they will be instantly taxed for indirect taxation with a possible payment of the totality of this, linked to the compliance with the WSTAX(1). With regard to direct taxation, the accumulation of data about indirect taxation gives the amount of profits. lt will be levied by the relevant tax authorities of each MNE entity and may be, as today, paid at regular moments.
(1) – Wayfair Sale Tax transformed into Wayfair State TAX – or: WSTAX.
It should be noted that the tax authorities are in constant communication on each transaction. Therefore each taxing authority has full knowledge of the transaction and will know perfectly what will be accumulated as direct and indirect taxation in the other State.
The room for maneuver for tort actions will therefore be largely under surveillance.
We can see it in the slide show in reference
- Authorization to continue the transaction (slide 14), the exporting company must normally be registered(*) with its tax authorities so that they give the export authorization in compliance with the agreement of the OECD article 7,
- When this authorization is given, a copy for the first information is sent to the tax authorities of the market State in order they analyze the transaction put in reserve for a next treatment(1).
- These should expect a purchase declaration (in B²B) which will occur on slide 15,
- Declaration of equality of controlled declarations in slide 16,
- Automatic exchange of BEPS information between the two States and production of export / import bar codes in slide 22,
(*) – But it is possible the sale is authorized by the buyer’s State in special circumstances where the seller would not have a physical presence. The main thing for this State is to be informed the existence of the transaction which will allow its to receive the sale taxes as specified below by the production of import bar codes in slide 22,
(1) – In a B²C transaction, it is this process which makes it possible to validate the bar codes of the import documents which will authorize this importation but above all it is this process which allows the market state to know of the transaction.