– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|45||New proposed standards – double taxation.||Pillar 1||8||52||RBNdi|
29. The new rules, taken together with existing transfer pricing rules (RBDpx – RBPpt), will need to deliver the agreed quantum of profit to market jurisdictions and do so in a way that is simple, avoids double taxation (RBPpi) – RBNdi), and significantly improves tax certainty (RBRsj – PLSju) relative to the current position. It is also important that the new rules are reconciled with existing rules. That is, the new rules should not create distortions and should be effectively applicable to both profits and losses (RBAtb).
As you will see in the new DAGTVA transfer pricing calculation, and in the slide show in reference, the transactional taxation not change the tax laws in each State and at no time it is impossible to see the possibility to have a double taxation. The DAGTVA process only do the dispatch and the return of a share indirect taxation by effecting a better distribution of production taxes in each jurisdiction of activity.
You will also see the double taxation is avoided, as explained above, and with regard the B²B transaction within an MNE, the indirect taxation which is levied in a jurisdiction is refunded in the other, with no impact of this indirect taxation in the MNE. For the direct taxation nothing changes as written above until it is decided to do otherwise in the second phase of negotiations of an international taxation system, if return profits are justified by the results of the DAGTVA tax process.
It emerges from the DAGTVA transfer pricing calculation, the international trade within MNEs is not affected by indirect taxation. It is a new form of VAT benefits which would be applied transnationally within a MNEs, even if the MNE operates in jurisdictions which do not have the same indirect taxation system.
DAGTVA is independent of the indirect taxation system used.
For other details, see the RBPpi page.