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|
|62||Qe – multilatéral agreement on profits to market jurisdictions amount A||Pillar 1||10||11||RBQam|
Quote : 2.5. Pending key questions
Definitions and quanta
35. Similarly, agreeing multilaterally on the scale or amount of profits reallocated to market jurisdictions (in particular Amount A) (RBQam) will be an essential aspect of the “Unified Approach”. The amount of profits to be reallocated would be determined by simplifying conventions and will be informed by an impact assessment of the “Unified Approach”. However, the choice of this amount will ultimately be the result of a political agreement that needs to be acceptable (RBQcm) to all members of the Inclusive Framework, small and large, developed and developing.
As is commented on in several sections including: RBMap , RBMar , RBMaf, RBMag, before obtaining a multilateral agreement on a proportion of the profits to be reallocated to a market jurisdiction, it must be kept in mind that these will not be not these MNEs which will restore these benefits, but the sellers states which have received them taxes included inside the payment of the production selled! This possibility may be happends when the volume and amount of transaction will be known by the two States concerned by the transaction and today it is not the case. Before obtaining a multilateral agreement on a proportion of the profits to be reallocated to a market jurisdiction, it must be kept in mind that these will not be not the MNEs which will restore these benefits but the seller States which have received them, indirect taxes included.
As William Morris PwC’s Deputy Global Tax Policy Leader says, in a Bloombergtax.com article from July 28, 2020 , there are 137 states that have competing interests in this project, not to mention those that are uncooperative in the field!
With DAGTVA calculation of transfer prices . As it is said in many sections including RBPpi of this proposal, no fraction of the profits will be attributed to a market jurisdiction until they have been able to be quantified and if, once quantified, there will remain a valid reason for taxing them. With DAGTVA, it is a better distribution of these benefits between the States that will normally provide for its, associated with new measures for the allocation of international aid. For the moment there is nothing to change in the direct taxation as can be read in the section RBMap dedicated to the pillar 1.
Therefore, there is nothing to renegotiate in this area of responsibility of each sovereign State, there is no new right to tax, with a simple system and the facility to have a majority international agreement accepted in this domain.
To quote the RBMdf section , it is important to note that in this transactional taxation system with DAGTVA, it is not the MNEs that decide, but States which apply everywhere the same taxation process. The subject of this study in the search for a World Single Taxation. Even a small majority of States is enough for its application to spread, knowing that United States has already legislated in this area, following the Supreme Court decision with judgment 17-494 South_Dakota / Wayfair Inc. ,involving a digital marketplace and the State in which it sells its products. I want to talk about the Wayfair Sale Tax which will soon be applied to nearly a quarter of the global economy and already to more than forty intra-US States. This law, by obligation on the part of other abroad States to respect its directives through the digital marketplaces they host, imply an effective and legally binding procedure for the rest of the World to apply this law and without their being able to really oppose it. (see the « Amount C » option in this page)
It is basically and implicitly the application of an international system of taxation that is seeking by OECD. The extra-US States will even have everything to gain from it, with a taxation of MNEs better distributed between them, as explained in the DAGTVA calculation of transfer prices.
This will force recalcitrant States to apply a correct taxation and fiscal transparency unless they find themselves « punished » as in this excerpt from the RBSpg page :
« As a result, an obvious imbalance in the commercial and fiscal consequences will therefore have to result in actions which will be detailed in the DAGTVA transfer pricing calculations because this imbalance can come from two sources, on the one hand the commercial aggressiveness of the company which will be largely constrained, on the other hand the actions of ‘non-cooperative’ states which will be ‘punished’ instantly! As has just been specified in this section, you will see that the room for maneuver of both parties will be greatly constrained, leading to a balance in international economic development by putting an end to the anarchy observed today. »
‘Uncooperative’ States which will be ‘punished’ instantly as explained in this article devoted to a new international regulation by taxation , regulation which will necessarily be the counterpart of decisions taken concerning the World Single Taxation system, implying in fact a World Single Market, not the topic of this study !
The political agreement would relate only to the DAGTVA calculation of transfer prices, with multiple positive consequences for small economies as specified in the sections: RLEmo, RBSpg , RLCau , RLNet , RBMap.