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|
|90||Ap – evaluate an approximately adequate profit.||Pillar 1||15||29||RBAea|
Quote : Appendix – Detailed proposal on profit allocation
Amount A (RBAag)
60. The final step of the proposed approach would be to allocate the relevant portion of the deemed non-routine profit (w% in the above example) among the eligible market jurisdictions (RBAwj). This allocation should be based on a previously agreed allocation key, using variables such as sales. The selected variables would seek to approximate the appropriate profit due (RBAea) to the new taxing right.
We must start at the end to provide an answer to this section. There will be no new possible tax right for MNEs because they would instantly pass on the new taxation applied by an increase in selling prices, without impacting them, except by reducing the purchasing power consumers in the market State, as it is said in several sections including the two preceding ones: RBAmw , RBAwj.
As is also explained, it is difficult to envisage an allocation key which would necessarily be applied in the market State because it could have the same effects of applying additional taxation which would also have instantaneous repercussions on prices. Neither of the two States beneficiaries of the taxation applied on the trade, its income corporate taxes on production State and the other market State, the sale taxes on this distribution which must finance its imports.
It would be better to go through the regulation of the DAGTVA calculation of transfer prices which would be responsible for balancing the taxes between States and MNEs according to the turnover achieved and the taxation applied, in comparison with a possible local complete production / distribution. But above all, it would allow this turnover to be recorded entity by entity, jurisdiction by jurisdiction. It would then be time to see if rebalancing is possible. But for the moment, without precise knowledge of the turnover achieved, it is impossible to go further!
Using the DAGTVA regulation is simpler, everyone would use the same process in complete transparency and there is practically nothing to negotiate. States that applied this new tax system would impose it by default on others.
To conclude a little dryly this page, United States, which have already legislated in this area with the « Wayfair Sale Tax » , improved with the DAGTVA tax system, will impose the environment of this process to the rest of the world, as has often the case for an American law and to add, with the new US team J. Biden / J. Yellen, the Made in America Tax Plan was unveiled by the US Treasury on 7 April 2021 and these decisions improve and comfort the DAGTVA proposal of a global tax system which is describe in this study.