– DAGTVA truth table –
DAGTVA® – Scope of the taxation system
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Ref.|
|13||Narrow relations between businesses and consumers.||Pillar 1||8||31||CARet|
Quote : This supports the idea that the proposed “Unified Approach” should be focused on large consumer-facing businesses (CARet), broadly defined, e.g. businesses that generate revenue from supplying consumer products or providing digital services that have a consumer-facing element.
**** Foreword ****
At the beginning of the industrial revolution a manufacturer sold what he produced completely. The situation was complicated when manufacturers have been confronted with different technologies which they did not master, to produce an assembly meeting a particular technical need.
The most obvious example was the railroad where it was impossible for a single company to produce: rails, parts of locomotives and trains, manufacturing which had become very complex. The three wars in Europe in 75 years and in particular that of 1870 and 1914-1918, generated technological developments such (1) in the industry that the tax authorities had to separate more clearly the tax systems involving transactions between companies and those where an ultimate consumer intervened.
1- We can cite a single example with the “U-Boote” submarines used by Germany during the Second World War, the plans of which were designed during the first!
The sitation happened at the time, with an observation that can be summarized as follows; the more there were manufacturing stages and the more the taxation of one stage was found in the sale price on the next stage and so on, to finish with the price of a product very affected by the volume of taxes! It is this problem that led in the 1920s to the implicit creation of the VAT where only the valuation of the industrial stage is taxed with the enormous advantage of not including labor and investments in this taxation. One would have thought that this system would globalize quickly, but it was confronted with realities that can be found in the fact, for example, that United States never adopted VAT for the following main reasons:
- The American federation leaves each state a powerful fiscal independence,
- It is therefore unthinkable to have in this federation some of the States having VAT and not others,
- Wherever VAT was applied, the government of the day lost the following elections and no state governor would take on such a challenge!
- With mid-term elections, the US is also in a perpetual electoral campaign and no party between Conservatives and Republicans would risk proposing VAT, at the probable risk of losing all future elections!
On the other hand DAGTVA provides an answer to this problem. You have a short abstract from this page below devoted to United States and Canada which was written long before the promulgation in June 2018 of the « Wayfair Sale Tax » , following the decision 17-494 « Wayfair Inc. » by the US Supreme Court which calls the restitution of sale taxes in market States.
Quote : “ The DAGTVA process makes that it is possible to extract the indirect tax inside the payment without attention to the tax system used. It then becomes possible to refund and may be send this indirect tax on the payment in an market State, without changing the tax regulations and laws of the different States in United-States. This property makes it is possible to concerve the GST / TPS tax system as today and to have the same tax returns qualities of tax revenues as the VAT (Inside the companies, the VAT not penalize by tax, investment and labor, it is very important for the competitiveness of these companies in the world economy), qualities observed in the economy inside other OECD members with the VAT environment. This is very important for the introduction of a consumption tax without this tax being exactly the VAT (banned word in US) and possible it is the X-TAX describe in the Blueprint Tax Reform.
Indeed, setting up VAT as it’s in the European Union could not be done without changing the United-States Constitution, with an impossible agreement between 52 States that have their own tax laws. DAGTVA bring a simple solution at these problems.«
To return on this page devoted to « Narrow relations between businesses and consumers » , it is essential to establish permanent control link between the company selling and the two relevant taxation authorities when the transaction is cross-border .
Indeed when an ultimate consumer buys a product on the Internet in another State via his bank card, he instantly pays his purchase without any of the tax authorities of the two States being informed. The selling can be clandestine and how can you tax a business in this case? There is only one trace in the banking system, a trace that is difficult to consult in the secrecy of transactions.
This is the permanent control link what DAGTVA establishes, while eliminating any difference in tax treatment between companies and end consumers .
The positive consequences of this elimination of difference were exposed during a presentation of DAGTVA in Paris on November 9, 2016 at the conference of OECD WP9 (indirect taxation) : Slideshow and the attached text .