– DAGTVA truth table –
DAGTVA® – Prerequisites for the taxation system
|Problems exposed, requests, constraints and subjects
|Strengthening legal security.
Quote : Increased Tax Certainty delivered via a Three Tier Mechanism. The approach increases tax certainty (PLSju – PRSju) for taxpayers and tax administrations and consists of a three tier profit allocation mechanisms.
The Working Group identified three possibilities described in the OECD document for achieving legal certainty in tax matters. This notion must then be separated into several parts:
- on the one hand, to obtain tax revenues expected by the States,
- on the other hand, the manner and the technique used to obtain them,
- and finally how to fit the first two headings into a third in laws applicable everywhere providing legal security for operations.
In the three options of Amounts: A, B and C, as it is in the details at the bottom of page 6 of the option « Amount A »,
a) The deemed residual profit used for Amount A would be the result of simplifying conventions agreed on a consensual basis.
b) This means that it would only seek to approximate, without precisely quantifying, the amount of residual profit of a MNE group (RBMap) (see paragraphs 30 and 35 below).
We see that we need to find a simple consensus basis to calculate a residual benefit, but this only exists when a normal benefit has been quantified, a main subject of this study. Residual profit may be taxed beyond a normal profit threshold that the OECD assesses at 12%. Taxed but by whom?
It seems that we must first be concerned with having a simple consensus base to calculate the normal profit before tackling the residual and to obtain this result, we must first know how a transfer price could be defined simply what by logical consequence would define the taxation which would be applied to it. This is what will be presented to you in these files, taken by downloading the Microsoft’s Excel spreadsheet, in English from the tab file 6 ‘Transac-base EN – 6‘, which is commented in this first page that define how a transfer price could be calculated summarized 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.