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|
|35a||Non-standard profits derived from intangible assets.||Pillar 1||6||35||RBIns|
Quote : While there seems to be adherence among Inclusive Framework members to the principle that routine transactions can normally be priced at arm’s length, there are increasing doubts that the arm’s length principle can be relied on to give an appropriate result in all cases (such as, for example, cases involving non-routine profits from intangibles (RBIns) ). Moreover, there seems to be agreement that the arm’s length principle is becoming (RBRpc – RBNac) an increasing source of complexity and that simplification would be desirable (PLSsy – RLSrl) to contain the increasing administration and compliance costs of trying to apply it.
In the RBMap section we can read:
« Regarding the distribution of profits:
As clarified on the RBSju page , the DAGTVA transfer pricing calculation takes into account in the » amount A » mechanism, not only residual profits, but also profits: standard, routine and intangible, from the moment when they are invoiced, except that these résidual profits will not be returned to the market jurisdiction. They are treated fiscally during the same time of the transaction, this is the advantage of the DAGTVA transactional system where the totality of the taxation is definitively affected for the respective shares in each State where the commercial activity takes place.
And we speak here about the direct taxation which can be levied, as today, without modifying existing local taxation laws.
There is therefore nothing to renegotiate in this area of responsibility of each sovereign State, there is no new right to impose and modify direct taxation, with the ease of having a majority international agreement accepted in this area and with the probable consent of the United States, which has already legislated internally in this area. »
In the RLNet page we can also read:
“DAGTVA confirms this obligation to have a permanent establishment(*) wherever an MNE wishes to trade, or the authorization to trade in each State of activity. By analyzing the new DAGTVA transfer pricing calculation , we realize the « reference transaction » that would determine a market price if everything were produced by a local company, respecting the arm’s length principle, requires the MNE to have a permanent establishment in the market State.
(*) – But it is possible that sale is authorized by the buyer’s State in special circumstances where the seller would not have a physical presence. The main thing for this market State is to be informed the existence of the transaction which will allow its to receive the sale taxes as specified below by the production of import bar codes in slide 22 of the the slide show in reference. »
The fact is, with DAGTVA, no new tax right contributes to the simplification of the hoped international tax system (related pages: RLSrl , PLSsy , RBAsm, RBAas , RBAps).