MNE benefit RBQme

Proposal for a Global Taxation System

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DAGTVA® – Distribution of MNE profits

No. Problems exposed, requests, constraints and subjects Origin Pg Li Doc
66 Qe – existing mechanisms for the elimination of double taxation. Pillar 1 10 26 RBQme

Quote2.5. Pending key questions

Elimination of double taxation

36. Because the existing domestic and treaty provisions relieving double taxation apply to multinational enterprises on an individual entity and individual country basis (RBQdd), the implementation of the proposed approach would require the identification of the member(s) of an MNE group that should be treated as owning the taxable profit in such market jurisdictions under Amount A (RBQdg) (e.g. entity(ies) with high profitability, entity(ies) owning certain intellectual property (IP)). In particular, it will be important to explore to what extent identifying the relevant taxpayers and the relevant profit to be reallocated would allow existing mechanisms for eliminating double taxation (RBQme) to continue to operate effectively. This would involve how domestic and treaties rules to relieve double taxation could operate under the “unified approach” (RBQrd).

This section on double taxation is so important that it will be splited and explained into the following pages: RBQdg, RBQdd, RBQrd, for this same subject.

As is explained in many sections including: RBMap , RBMar , RBMaf, RBMag, RBMac, MNEs entities are perfectly identified in the DAGTVA calculation of transfer prices by their internal transactions, with a taxation which is distributed equally and based on local turnover where taxable profits in each jurisdiction under « Amount A » will be claimed.

To quote the RBQdd section :

 « With transactional taxation and DAGTVA transfer pricing calculation, it is impossible for double taxation to be found. The taxation will always be proportional to the business activity noted in each jurisdiction. In the comments about the return of a fraction of sale taxes in market States, by definition applied on the indirect taxation, the part which will be levied in one jurisdiction will be automatically returned to the other entity of EMN in the other jurisdiction (Wayfair decision applied in the same entity). For paraphrasing and compare the MNE with a person, it is to take off the money in the left pocket to put it in the right with the nil result and no double taxation in this area ,thus proving, in the proposal, that this indirect taxation does not impact the business world in the transnational context of MNEs and that the DAGTVA technical device asserts its international qualities of the Value Added Taxation system. Without worrying about the tax system in application in each jurisdiction.

DAGTVA will still impose, by default, this system with a Value Added Taxation on multinational cross-border transactions, hence the proposal of a global taxation system (1). This does not mean that each jurisdiction will be obliged to abandon the direct and indirect taxation that it already applies, nothing changes at this level. There would be, in the context of a global agreement on taxation, nothing to negotiate in this domain.« 

(1) – This is what will allow the United States to enter with the standardization of the WSTAX in the VAT system, without them having the obligation to modify the Constitution with an agreement that would have been impossible to find and without having to pronounce this word of « VAT » banned in the US!

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