Proposal for a Global Taxation System
– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|92||Ap – Amount B – Generalities.||Pillar 1||15||39||RBAbg|
Quote : Appendix – Detailed proposal on profit allocation
Amount B (RBAbg) Generalities
62. The second type of profit would seek to establish a fixed return (RBMbe) (or fixed returns, varying by industry or region) for certain “baseline” or routine marketing and distribution activities taking place in a market jurisdiction. The fixed return under Amount B would seek to reduce disputes in this area, where tensions are important as a result of applying the transfer pricing rules. The intention would be to benefit taxpayers and tax administrations, as it would reduce the risk of double taxation (RBAbr) as well as the substantial compliance costs arising from the aggressive enforcement of current transfer pricing rules.
I can only copy to you below the section concerning fixed returns under « Amount B » : RBMbo . And to paraphrase the subject of the topic, assigning a fixed return to a profit is like putting in place a tax system that probably already exists in some jurisdictions. This yield being what remains after taxing the turnover achieved it can be over the basis at 12% as OECD promote. But this yield is the full ownership of the MNE that can be used by this MNE as it wants. It seems impossible to achive an agreement in this domain to oblige the 137 States, of which William Morris speaks in this article, to adopt this obligation and must modify their internal tax laws with an impossible agreement to find at the international level and to comfort this I quote only a part of the RBMbo page:
« First, it seems that we must be concerned for having a simple consensual basis to calculate the profit made before tackling what should be broken down between States as fixed remuneration. It would be necessarily an additional taxation and given the high level of taxation we seen today in what is already applied to MNEs, if we want to put a new tax right, we must remove one that exists. If this is not the case, the risk will be to see the MNEs pass on this new tax right on their selling prices, as we have seen when the GAFAs have done following the arbitrary taxation of certain countries, including France. It follows that it is the French companies and consumers who paid this GAFA tax and not the GAFAs themselves, with the main consequence to reduce to nil the revenues of this right tax.
This new right to tax would not be part of the DAGTVA process by default.
With logic the option « Amount B » is not retained by the DAGTVA tax system in the context of the research on a Global Tax System. » End quote.
With the DAGTVA transfer pricing calculation , you will be able to note two crucial points:
- The direct taxation already applied in each jurisdiction is not changed, so there is nothing to negotiate in this area.
- Inside MNEs, the indirect taxation is completely neutral as in the VAT tax system, which would allow United States to enter this process without having to pronounce this word « VAT » banned in the US, which are at the origin of the Wayfair law by integration them by default into the international system of taxation already endorsed in US.