– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|Problems exposed, requests, constraints and subjects
|Mt A – Consensus between members of the Inclusive Framework
30. Against that background, the “Unified Approach” proposes the following three tier mechanism:
Amount A – A new taxing right for market jurisdictions over a portion of within the scope MNE groups’ deemed residual profit (RBMaf – RBMag). This could potentially be calculated on a business line basis. In broad terms, this deemed residual profit (RBMag) would be the profit that remains after allocating what would be regarded as a deemed routine profit on activities to the countries where the activities are performed. This would be determined by simplifying conventions, and require the determination of the level of the deemed routine profit and also a decision on the proportion of the deemed residual profit that should go to the market, which in turn would be allocated to particular markets meeting the new nexus rule through a formula based on sales (RBMac). Percentages remain to be determined and would be part of the consensus-based agreement among Inclusive Framework members (RBMai).
It is explained in detail in the RBMac page with extracts below:
As for the « Amount B option » , at first glance, apply an arbitrairy taxation that would be based on a distribution key as long as we do not know the level of profits that could justify this taxation and their distribution among States, cannot be retained.
“The fact that there is, with DAGTVA, no new tax right based on a distribution key, contributes to the simplification of the hoped international tax system, (related pages on simplification: RLSrl , PLSsy , RBAsm , RBAas , RBAps).
These taxes based by an allocation key option could eventually be negotiated last when everything else will be in place, used and analyzed to learn from it.
There would be nothing to negotiate in this domain and If all goes well not before several years!