{"id":7992,"date":"2020-11-07T09:00:02","date_gmt":"2020-11-07T08:00:02","guid":{"rendered":"http:\/\/www.dagtva.com\/?page_id=7992"},"modified":"2021-05-15T07:32:20","modified_gmt":"2021-05-15T06:32:20","slug":"produc-8-wstax-4-en","status":"publish","type":"page","link":"https:\/\/www.dagtva.com\/?page_id=7992","title":{"rendered":"Produc 8% Wstax 4% EN"},"content":{"rendered":"

Proposal for a Global Taxation System<\/a><\/p>\n

\u00a0– DAGTVA<\/strong> explanatory documents<\/strong> about the calculation of transfer prices –<\/span><\/p>\n

\u00a0– Basic situation of an ideal transaction<\/a> –<\/p>\n

\u00a0– Situation where a production State ‘A’ applies a VAT and CIT rate at 8% and a WSTAX<\/em> at 4% on a transfer price to State ‘B’ which have standard taxation –<\/strong><\/span><\/p>\n

We first studied the situation of an ‘idealized’ transfer price,<\/a> then presented the situation of a transfer price in <\/strong>a market State <\/strong> which applied a VAT and CIT rate at 8%, <\/strong><\/a> the reverse situation<\/strong><\/span> where it is the production State<\/strong> which applied a rate of VAT and CIT at 8%<\/strong><\/a> in order to see the consequences on the fiscal results for the MNE and the States in the context of the DAGTVA system.<\/p>\n

Obligations to find a mutualised and international solution which carry out the restitution of sale taxes in market States, invite us to study this constraint that the production State must apply and use for this the framework of W<\/span>ayfair S<\/span>ale T<\/span>ax<\/strong> <\/em><\/span>in United States with an adaptation by the DAGTVA system.<\/p>\n

After having already studied the situation of a configuration where the production State ‘A’ applies a WSTAX<\/strong><\/em><\/span> at 4%<\/strong><\/span> with standard tax rates and the market State ‘B’ which apply a TAX\/VAT<\/strong><\/span> and CIT<\/strong><\/span> at 8% <\/strong><\/span>in this page:\u00a0 Distrib 8% WST 4% – 9<\/a><\/p>\n

We are going to study the reverse situation where a fiscally non-cooperative State, with a TAX\/VAT<\/strong><\/span> and a CIT<\/strong><\/span> at 8%<\/span> , <\/strong> would apply or be obliged to apply<\/strong><\/span> a WSTAX<\/strong><\/em><\/span> .<\/p>\n

Go to the tab<\/strong><\/span> ‘Prod. 8% WST 4% – 10<\/strong><\/span>‘ from Excel:<\/span> egalisation_des_taxes.xls (1)<\/span><\/a><\/p>\n

1 Note<\/strong> : to have a correct opening of the file, please download the document on your computer, for your convenience please do not open it directly.<\/span><\/span><\/em><\/span><\/p>\n

We saw in the slide show in reference<\/a> and in the situation of a WSTAX<\/strong><\/em> at 10%<\/strong> without tax competitiveness issue<\/a> , that it is the ultimate consumer in the market state who paid the W<\/span>ayfair S<\/span>ale T<\/span>ax<\/span>.<\/strong><\/em>\u00a0 This provision allows a modest economy distributor State to respond to the injunction for the refund of a tax to a rich country, it is not this poor State which pays the tax but the rich State which is reimbursed on the basis of the tax. purchase of its ultimate consumer. The part retained by the State of production being the tax fraction attached to this production, with the consequence of splitting the total VAT to be collected into VAT to be collected on production and WSTAX<\/span>.<\/strong><\/em><\/p>\n

I will not come back to this question ‘Why have a <\/em>WSTAX<\/i><\/strong><\/span>‘ ? <\/em>dealt with mainly in the page devoted to the configuration of calculation of an ‘ideal’ transfer price<\/a> and in the page of explanations about a configuration<\/a> where the State\u00a0\u00bb A ‘applies a WSTAX<\/strong><\/em><\/span> at 10<\/strong>%<\/strong> <\/span>with standard tax rates in both States.<\/p>\n

Application of a WSTAX<\/em><\/span> to the export in the example at 4%<\/span><\/strong> in D10<\/strong><\/span>.<\/span><\/p>\n

We can already note that:<\/p>\n

Production state ‘A’<\/u><\/strong> with a rate of CIT<\/strong><\/span> and TAX\/VAT<\/strong><\/span> at 8%<\/strong><\/span> :<\/span><\/p>\n

WSTAX<\/strong><\/em><\/span> at 0<\/strong>%<\/span> Tax Revenue ‘A’ = 210<\/strong><\/span> \u00a0\u00a0 – Tax Revenue ‘B’ = 833<\/strong><\/span> – Diff = -623<\/strong><\/span><\/p>\n

WSTAX<\/strong><\/em><\/span> at 4<\/strong>%<\/span> Tax Revenue ‘A’ = 168<\/strong><\/span> \u00a0\u00a0 – Tax Revenue ‘B’ = 907<\/strong><\/span> – Diff = -739<\/strong><\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 Diff =<\/span>\u00a0 -42<\/span>\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 Diff = +74<\/span><\/strong><\/p>\n

A fiscally uncooperative State could argue that it does not submit to the injunction to apply a WSTAX<\/strong><\/em><\/span> but, the generalization of W<\/span>ayfair S<\/span>ale T<\/span>ax<\/strong><\/em><\/span> as a support for the global tax system<\/span> , as well as regulations in the European Union which go in this direction and will be applicable in 2025, and perhaps even before, will oblige the States to return the sale taxes on cross-border transactions and not only on the digital market!<\/strong><\/span><\/p>\n

Any jurisdiction that vould not carry out these sale taxes retrocessions as can be seen in the slide show in reference <\/a> slides 22-23<\/em><\/strong><\/span> and calculated through the intermediary of the WSTAX,<\/strong><\/em><\/span> could see the transactions blocked as in slide 22<\/strong><\/em><\/span> or the import barcodes would not be produced.<\/p>\n

We have already seen that the 137 States are reluctant to return their resources with these taxes included in the production tax.<\/p>\n

We have also seen that ‘to return or restitute<\/strong>‘ means that we have taken something from someone that we are returning<\/strong> ! It is not the State of the seller that pays the sale taxes but with DAGTVA and the law in the United States, we only returned a part of sale taxes paid by the buyers<\/strong>.<\/span><\/p>\n

With DAGTVA we separate and extract from the production tax (at the bottom of the invoice), the total indirect taxable amount so that, as equitably as possible, this production tax will be divided in what will be the consumption tax included in the sale price which shall be returned in the market State.<\/span><\/p>\n

But the States with favorable taxation will have a big problem, they will have to return a high percentage of a tax recorded on a market price. A market state with standard taxation legitimately expects to be returned the share of sale taxes recorded in its market, so that the tax distribution must fairly balanced between the two states where the transaction takes place. States with favorable taxation will therefore have to return a significant part, sometimes higher than what they perceive locally and will end up only with low tax revenues from direct taxation from those local companies, MNEs or digital when they are localized at their home.<\/p>\n

But to return sale taxes, tax havens will first have to collect them and this is what will force them to become taxable!<\/p>\n

Let’s go back to the Excel table in the ‘Prod. 8% WST 4% EN – 10<\/strong><\/span>‘ and apply in D10<\/strong><\/span> a WSTAX<\/strong><\/em> <\/span>at 4%<\/span>.<\/strong> We see that the indirect taxation of 123<\/strong><\/span> has been divided into 2<\/span><\/strong> parts 62<\/strong> <\/span>(rounded) to apply the same principle of calculating what must be returned. But in a situation where there is no competition on the fiscal level, we have seen in the ‘Transac-base EN – 6<\/span><\/strong>‘ tab, that the market State expects 165<\/span><\/strong> must be returned to it with a fair share made with 10%<\/strong><\/span> of WSTAX,<\/strong><\/em><\/span> half of the TAX\/VAT<\/strong><\/span> rate.<\/p>\n

Between 165<\/strong><\/span> and 62<\/strong><\/span> of expected reimbursement, we have not achieved the right balance and the market State in its control of the transfer price will require that an addition to 165<\/strong><\/span> be made.<\/p>\n

The DAGTVA transfer pricing calculation system working for all states in the same way this process\u00a0would possibly impose, as in the present case, <\/span> on the transaction on State ‘A’ of production, for achieving a fair taxation on regard the law, a WSTAX<\/em><\/strong> at 7,66%<\/strong> to obtain the 165<\/strong> of taxes that must be returned to the State of consumption, if this State of consumption has standard tax rates<\/span>.<\/p>\n

This would not be without consequences on the transfer price which would pass in D29<\/strong><\/span> from 1540<\/strong><\/span> to 1658<\/strong><\/span>, i.e. more than 7.66%<\/strong><\/span> (displayed rounded to 8) of increase which has repercussions on the taxation of profits but without impact on indirect taxation of the MNE<\/span> which pays 118<\/strong><\/span> in D40<\/strong><\/span> with a TAX\/VAT returned in I34<\/strong><\/span> at 352<\/strong><\/span> instead of 123<\/strong><\/span> in D41<\/strong><\/span> for 328<\/strong><\/span> with a slight ‘bonus’ for the EMN of 20<\/strong> for the taxed situation! While remaining inside a range of the arm’s length principle<\/span>, from 3970<\/strong><\/span> to 0.24%<\/strong><\/span>, the market price increases from 3,902<\/strong><\/span> (4%<\/span>) to 3,970<\/strong><\/span> (7.66%<\/span>) or + 1.71%<\/strong><\/span> . The direct taxation of the MNE on the transaction passes in D53<\/strong><\/span> to 128 + 195<\/strong><\/span> in I53<\/strong><\/span> (invariable) instead of\u00a0 107 + 195<\/strong><\/span> with an increase of 21<\/strong><\/span> in State ‘A’, the total CIT<\/strong> <\/span>in State ‘B’ remaining unchanged at 195<\/strong><\/span>.<\/p>\n

On the other sector, the tax revenues of State ‘A’, in these tax conditions, collapsed from 336<\/strong><\/span> to 126<\/strong><\/span> represented only by direct taxation with an obligation of fiscal transparency which will make it possible to know precisely the turnover of MNEs achieved in each jurisdiction!<\/p>\n

It can also be noted that the tax revenues of State ‘A’ collapsed from 336<\/strong><\/span> to 144<\/strong><\/span> with a WSTAX<\/span><\/strong> at 4%<\/strong><\/span> and at 86<\/strong><\/span> at 7.66%<\/strong><\/span> in the search for a fair response to the law on restitution sale taxes! What to discourage any tax haven from continuing in this way represented only by the consequences on direct taxation. With the obligation of fiscal transparency which will make it possible to know precisely the turnover of MNEs achieved in each jurisdiction!<\/span><\/p>\n

The impact of a WSTAX<\/strong><\/em><\/span> at 7.66%<\/span><\/strong> imposed in production State’A’, in order to obtain a balanced refund of sales taxes in these conditions, would have an overall impact on the MNE of 6.95%<\/strong><\/span>. The MNE would then be penalized for wanting to produce in a low-tax State. Constraints responding, again, to option ‘Amount C’ of the OECD Pillar 1 document.<\/span><\/p>\n

We made a first study of these transfer prices with DAGTVA. The tabs corresponding to re-imports of productions can be easily calculated with what has just been described. They are not represented and could in any cases impose an unacceptable default reference price compared to the market price.<\/p>\n

You can get closer to the modified OECD Pillar 1 document<\/a> with the links and comments that can be found in the various sections which are also accessible from the DAGTVA truth table<\/a> (items inside automaticaly translated for the moment).<\/p>\n

Conclusions about the DAGTVA transfer pricing calculation<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Proposal for a Global Taxation System \u00a0– DAGTVA explanatory documents about the calculation of transfer prices – \u00a0– Basic situation of an ideal transaction – \u00a0– Situation where a production State ‘A’ applies a VAT and CIT rate at 8% … Continuer la lecture →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":7563,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-7992","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/pages\/7992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dagtva.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7992"}],"version-history":[{"count":10,"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/pages\/7992\/revisions"}],"predecessor-version":[{"id":10206,"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/pages\/7992\/revisions\/10206"}],"up":[{"embeddable":true,"href":"https:\/\/www.dagtva.com\/index.php?rest_route=\/wp\/v2\/pages\/7563"}],"wp:attachment":[{"href":"https:\/\/www.dagtva.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}