– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|41||Attribution profits under the new link.||Pillar 1||8||37||RBAbt|
27. As noted, given that the new taxing right would create a nexus for an MNE group even in the absence of a physical presence (RBEla – RLPph – RLCpp – RLNet), it would be impossible to use the existing rules to allocate profit to this new nexus (RBAbt) in cases where no functions are performed, no assets are used, and no risks are assumed in the market jurisdictions. Therefore, new profit allocation rules are required for Amount A (RBMar).
To answer this question, refer to the RBMap section and start with the end of the above quotation: « Therefore, new profit allocation rules are required for Amount A. »
First, we must consider that wanting to retrocede profits, of any kind, it is neither the problem nor the business of an MNE, but the ‘job’ of a State which has received the profits from these MNEs. It is for its to properly taxing enterprises carrying on its territory in order to return all or part of taxation perceived on benefits at destination a market State (because now it is its), if tempted that it wants to return these!
It is not the role of an MNE to return taxation in another jurisdiction, how and by what right would it do so? Where is the control by the tax authorities about and on sums they are owner. Nobody never do this. It is as a bank which would leave its consumers dispatching its revenues in the bank accounts! Impossible!
We can also read in the RBMcs section :
« From a pure tax standpoint, the fact of wanting to return an additional profit in a foreign jurisdiction can only be done at the level of the State tax authorities and in no case as explained below by the MNE, which would imply that firstly, this profit was calculated by the local tax authorities, following a tax declaration by the local entity of the MNE (which is not certain) and necessarily over a very long tax period over accounting years which can be fenced. Secondly that this taxable additional benefit identified was notified, by return, to the MNE, with a transfer of it at destination a foreign jurisdiction, where the execution of the latter will be difficult to control, the whole with an impossible approval of the authorities of taxation on the part of the recalcitrant States with the transparency and the shipment of a fiscal windfall to which they are very ‘attached’! If such processes were put in place,MNEs would manage to declare substantial profits to be returned in tax havens with a worse situation than before! »
But we see that in the DAGTVA calculation of transfer prices , that it is not intended retrocession of benefits whether they are or not residual and the very notion of the word « presumed » by this fact does not exist and never could exist due to the accounting accuracy of the cross-border transaction. With DAGTVA, that no retrocession of a part of the direct taxation of MNEs was not planned, comes from the sharing of this taxation into a taxation on profits better distributed in each State.
The DAGTVA process render useless this retrocession under a new link.
To allocate profit to this new nexus (RBAbt) in cases where no functions are performed, no assets are used, and no risks are assumed in the market jurisdictions. Therefore, new profit allocation rules are required for Amount A (RBMar).
With the DAGTVA calculation of transfer prices , and in the slide show in reference (in B²B) and in this slide show in B²C that the export / import documents are linked to the fact that trade authorizations comply with article 7 of the OECD and that the notion of permanent establishment(1) in the market state is required. But under no circumstances will a profit made in one jurisdiction be returned in another directly by the MNE. Strictly speaking, it is the ‘job’ the State where this profit was created, and it could oppose to the restitution of taxes with the main argument which is to say ‘that it is doing its best to produce and return direct taxation to an another State which not mades the same tax effort’!
(1) – But it is possible the 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(1) by the production of import bar codes in slide 22,
United States Supreme Court lawmakers with Judgment 17-494 South_Dakota / Wayfair Inc. involving a digital marketplace and the state in which it sells its products, I mean W ayfair S ale T ax, DAGTVA uses an adaptation of this law, transformed into WSTAX, to return a part of the indirect taxation, because it is the local consumer who pays it in his State of consumption and which requests that the included tax in the local payment be returned to it!
United States Supreme Court lawmakers with Judgment 17-494 South_Dakota / Wayfair Inc. involving a digital marketplace and the state in which it sells its products, I speak about the Wayfair Sale Tax, DAGTVA uses an adaptation of this law, transformed into WSTAX, to return a part of the indirect taxation, because it is the local consumer who pays it and his State of consumption and which requests that the included tax in the local payment be returned to it!
But the most important in this process is to have the knwoledge of the transaction(1).
(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 this importation but above all it is this process which allows the market state to know of the transaction.
The market State with the WSTAX only recovers a tax that does not exist today by taxing an ultimate consumer on his cross-border purchases!