– DAGTVA truth table –
DAGTVA® – The linkage rules of the taxation system
|Problems exposed, requests, constraints and subjects
|New rule of the link without physical presence condition.
Quote: New rule of the link. For companies within the scope, it creates a new rule of the link, without condition of physical presence (RLPph), but based largely on sales.
P4-L42 All the proposals envisage a new nexus rule that would not depend on physical presence in the user/market jurisdiction (RLPph);
P6-L11 In a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence (RLPph).
P7-L38 This is particularly true of the remote sales of highly digitalised businesses, whose activities have called into question the relevance of the existing physical presence rules (RLPph)
With DAGTVA, the new link rules without physical presence conditions are still subject to the fact that, following the digital declaration of the sale, the seller’s tax authorities will accept or not that the transaction continue. Therefore, as detailed below, there is no longer a need to have a physical presence in the State of consumption to be properly taxed by the two States.
NOTE: Although this is not the subject of this page, it is also important to note that the export of a product sold can only be done by a company, whether multinational or not, with the expreced authorisations by the tax authorities of the two countries to allow it.
The procedure would work like this:
- 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 agreements of the OECD article 7 ,
- When this authorization is given (1), a copy for the first information is sent to the tax authorities of the market state for them to analyze the transaction which is put it in reserve. 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,
(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 it but above all it is this process which allows the market state to know of the transaction and check in slide 16 that the import authorizations do not come from fraud. There will have to be concordance in the references of the tax returns. If the transaction takes place from a tax haven, it can no longer escape the declaration procedure, it is up to it to tax the sale or not.
In the foreword, we saw that there were two subjects to be covered and it may be necessary to proceed in stages. The first subject of this section providing technical support for the second, with the taxation of digital profits with or without physical presence, this taxation of profits could be studied in a second step. But first we have to put in place a system that brings us the knowledge of the turnover achieved and this is precisely what is required in the resolution of this first problem, the restitution of sale taxes in the market States. .