– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|68a||Qe – a recovery or « compensation » mechanism.||Pillar 1||10||33||RBQrc|
Quote : 2.5. Pending key questions
Elimination of double taxation
37. In addition, approaches to address any risk of double counting or duplications between the three possible types of taxable profit (Amounts A, B and C) (RBQct) that may be allocated to a market jurisdiction would need to be considered, in particular interactions between the new taxing right under Amount A and current profit allocation rules. Similarly, specific rules would need to be considered for the treatment of losses under Amount A (e.g. claw-back or “earn out” mechanism) (RBQrc).
As in RBMap it is written in many sections with DAGTVA there is no new tax right which would justify an international negotiation.
« There is therefore nothing to renegotiate in this area which is the responsibility of each sovereign State, there is no new right to impose the modification of the direct taxation, with the ease of having a majority international agreement accepted in this area and with the probable consent of United States, which has already legislated internally in this domain. »
The DAGTVA transfer pricing calculation is so precise that the current profit allocation rules will be done on transaction-by-transaction an the tax basis in each jurisdiction. This means that profits as well as the losses generated locally will be taken into account by the tax regulations of each jurisdiction. At this stage there is therefore no planned clawback or “compensation” mechanism.
We can nevertheless point out that a system to granted international help could be set up and to see where these aids would be allocated according with the respect of the rules of healthy competition observed in the transaction compared to other States. With DAGTVA never the MNE is involved in this process of compensation and never at the level of MNEs’s taxation which will be never the owner of the State’s tax property and never charged to transmit directly a State tax directive towards another.
This is the « job » of International organisations or clearinghouses to balance an acceptable taxation by all.