Search

The adoption of the "authorised OECD approach" to the attribution of profits to a permanent establishment (PE) under the business profits article of the OECD Model Tax Convention on Income and on Capital has failed to produce uniformity given the persistence of the alternative relevant business activity approach. Through the analysis of a hypothetical case study involving asset dealings between a foreign PE and the enterprise head office, this article examines the interaction of the domestic law and treaty practice of two jurisdictions that are representative of different approaches to PE profit attribution, the UK and Australia, This study of intra-enterprise dealings involving inventory; depreciating assets and capital assets reveals the potential for mismatches in taxation outcomes, both overlaps and gaps, even in relation to these relatively straightforward transactions. [ABSTRACT FROM AUTHOR]

The article discusses the introduction of targeted anti-avoidance rule to deny the benefits of a tax treaty regarding royalties, and intellectual property in order to avoid double taxation benefits.

This article expands on the authors' response to the OECD discussion draft on a multilateral instrument (MLI) to amend bilateral tax treaties in accordance with BEPS proposals. It concentrates on whether it would be better for the MLI to amend existing bilateral treaties and then fall away, or to continue in being as a multilateral treaty to be read in conjunction with the bilateral treaties that it amends as a move towards a multilateral approach to tax treaties. The two alternatives are considered in the light of the status of explanatory statements about the amendments, the issue of the official languages of the MLI and of the bilateral treaties that it amends, and the domestic implementation procedures for the MLI. [ABSTRACT FROM AUTHOR]

The article focuses on the court case Fowler v HMRC with the tax treaty provision applies to a diver on the continental shelf of Great Britain with the performance of the duties of employment is instead treated for income tax purposes.

The article focuses on the correct interpretation Netherlands-India tax treaty of 1989 with the decision of the Delhi High Court in Delhi, India in the case Director of Income Tax v New Skies Satellite BV with the Indian Income Tax Act, 1961 (ITA).

It is accepted that tax treaties should allocate primary taxing rights over immovable property and income from immovable property to the situs state; the state in which a taxpayer has a permanent establishment (PE) should have priority over the state of its residence in so fa r as the taxation of income attributable to that PE is concerned. However, structural inconsistencies within tax treaties prevent these policies from being reconciled, which may enable tax avoidance. In analysing the relevant historical documents, one discovers a previously discarded solution, which allocates primary taxing rights to the situs state, secondary rights to the PE state and tertiary rights to the residence state. [ABSTRACT FROM AUTHOR]

Some Member States consider the outbound transfer of the companys place of effective management (POM) to a Third State to be a tax-relevant event, levying an immediate exit tax on the unrealised capital gains. Germany is going to tax a deemed liquidation if a domestic company acquires treaty residence in a Third State (paragraph 3 of article 4 of the OECD Model Tax Convention (OECD-MC)). The existing case law of the Court of Justice of the European Union (CJEU) deals only with the POM transfer to another EU/EEA State. The UK and Ireland apply a similar kind of exit tax when a domestic company becomes a tax resident abroad due to a tax treaty tie-breaker rule. In such a case, the company is deemed to have disposed of and immediately reacquired all of its assets at market value. Based on the CJEU decision in National Grid Indus BV v Inspecteur van de Belastingdienst Rijnmond/Kantoor Rotterdam (National Grid Indus BV) both Member States have recently updated their tax legislation thereby giving some kind of relief if the POM is shifted to another EU/EEA State. However, the relief is substantially restricted if the migrating company has moved its POM to a Third State. On the occasion of the CJEU judgment in National Grid Indus BV, other Member States (for example, Sweden and Spain) have also amended their exit tax legislation thereby giving relief for the company s POM transfer to another EU/EEA State, but principally not for a Third State migration. This article analyses the corporate exit taxation using as background the company s emigration to a Third State by acquiring treaty residence in that State (article 4, paragraph 3 OECD-MC). The main question is whether or not the exit tax rules of the Member States breach the freedom of establishment in regard to such Third State cases. This question has not previously been analysed in the literature on taxation and is not directly answered by existing case law. Another relevant question is whether primary law may constitute an obligation to give relief from corporate exit tax when the emigrating company acquires treaty residence in a Third State. This article will also discuss the possible implications for the national legislation on exit taxation. To analyse and answer these questions the German deemed company liquidation is utilised in order to provide a basic example. In comparison, the British and Irish exit charge for migrating companies will also be discussed, with consideration being given to cases in which the moving company establishes treaty residence in a Third State. [ABSTRACT FROM AUTHOR]

Under the China-UK double tax agreement, UK firms deriving profits in China are protected from Chinese tax liability on the profits unless the profits are derived through a permanent establishment. Unlike the original 1984 treaty between China and the UK, the current treaty, effective from 1 January 2014, deems a UK company to have a permanent establishment in China in some circumstances where its employees provide services in China, including services provided to its subsidiaries, for more than 183 days in a 12 month period. Where this happens, the profits of the deemed permanent establishment will be subject to Chinese company income tax. The profits will normally be calculated as a percentage of the service fee paid to the UK employer for the services provided by its employees. This article explores the circumstances in which a UK employer can find itself with a deemed permanent establishment in China when seconding its employees to work in its Chinese subsidiaries and, when this happens, how its tax liability may be calculated. [ABSTRACT FROM AUTHOR]

On a co-ordinated basis the OECD and G20 are focusing on a far-reaching Action Plan to combat base erosion and profit shifting (BEPS). Their plans are designed to prevent treaty abuse, foil hybrid mismatches, prevent unusual and aggressive transfer pricing, and encourage much more timely and comprehensive information sharing. This group are also continuing to work on the broader tax challenges oj the digital economy and are considering issues of nexus, data, and characterisation with a view to designing a fair and viable system in order to tax profits in the jurisdiction where economic activities occur and where value is created. There is great uncertainty about what income arises from the digital economy and also how it could be assessed and paid. How should a government respond when it believes that a multinational (such as Google) operating in its country uses the substantive provisions of a double tax agreement to pay virtually no tax in its jurisdiction? While the world awaits an integrated solution, a second level of governmental response to BEPS is emerging and involves purely domestic taxation legislation introduced on a unilateral basis. This is not co-ordinated and it is controversial because, arguably, it is designed in some circumstances to override existing treaty obligations. This article considers the relationship between treaties and domestic law before using a traditional international law categorisation to identify those countries that can legislate to override their treaties. International lawyers broadly classify legal systems around the world into a monist and dualist dichotomy. As will be explained countries with a dualist legal system, such as the UK and Australia, can deliberately override their international tax treaty obligations. The question is whether such dualist countries should be able to do so at all, or whether they should only be able to do so in certain circumstances. The 1989 OECD Report on treaty override (the OECD Report)' categorised various situations of treaty override as acceptable and unacceptable behaviourfor governments. In that Report the OECD discussed a case of treaty abuse involving the alienation of immovable property. The OECD concluded that even though the new overriding legislation was designed to put an end to an improper use of the tax treaty it was an impermissible contravention of a tax treaty obligation. This article argues that in such circumstances, now, a domestic law treaty override is both a justified and acceptable course of action. There are three key arguments offered in support of this proposition. The first is that the purposes of tax treaties have changed since the Report was written so that it is now clear that a main purpose of the treaty is to prevent tax avoidance and evasion. Secondly, domestic law already overrides treaties in situations of abuse. It has emerged since 1989 that domestic general anti-avoidance rules influence and affect double tax agreements in the vast majority of countries. Thirdly, as a matter of international law it can be argued that a taxpayer should not be able to take advantage of a treaty in an abusive way if their own state could not take such advantage. The state is required to apply the treaty in goodfaith and so should the taxpayer. Seen in this light recent developments involving new tax rules made by the UK and Australia, which of course are examples of dualist countries, appear reasonable rather than unreasonable even if they are examples of unilateral legislative treaty override (which the UK and Australia would likely contest). The approach taken in these jurisdictions, being grounded in preventing abusive structure and transactions, is consistent with one of the purposes of double tax treaties and therefore justified. [ABSTRACT FROM AUTHOR]

The article reports the decision of the South African Tax court in the case "AB LLC and BD Holdings LLC v Commissioner of the South African Revenue Service" concerning the creation of a service permanent establishment (PE) in South Africa by two U.S. companies.

The article offers information on the role of State aid rules in enforcement of proper transfer pricing techniques in European Union countries. Topics discussed include allowing double non-taxation in the absence of exchange of information during transfer pricing, definition for State aid by the Treaty on the Functioning of the European Union (TFEU), and challenges related to base erosion and profit shifting (BEPS) by Organisation for Economic Co-operation & Development (OECD).

The article offers information on the challenges faced by European Union (EU) Member States in the conclusion of a potential base erosion and profit shifting (BEPS) multilateral instrument. It analyses the distribution of competences regarding double taxation conventions (DTCs) between the EU and its Member States. It states that member states have to avoid imposing discrimination and restrictions on the exercise of the Treaty on the Functioning of the European Union (TFEU) freedoms.

The article concerns on the extent to which European Union law prevents the countries from signing a mutual instrument enforcing base erosion and profit shifting (BEPS). Topics discussed include freedom to member states determine their own tax system and to conclude international treaties concerning direct taxation, blocking effect of the existing rules of European Union law, harmonisation measures and proposals for a Common Consolidated Tax Base.

The article offers information on the Base Erosion and Profit Shifting (BEPS) from Organisation for Economic Co-operation & Development (OECD) to counter treaty abuse. It discusses whether the derivative benefits provision in the proposed Limitation on Benefits clause is needed. It considers whether the Principal Purpose Test meets the requirements of legal certainty and European Union (EU) approach to tax avoidance.

The article offers information on the compatibility of tax rulings with European Union's State aid law. Topics discussed include investigation of tax rulings under Article 107 of the Treaty on the Functioning of the European Union (TFEU) by the European Commission, creating legal certainty for both taxpayers and tax authorities by tax rulings, and criticising tax rulings for serving as tax advantage upon certain taxpayers.

The article offers information on the limitations on interest deduction that European Union countries must follow when implementing measures against base erosion and profits shifting (BEPS). Topics include harmonisation of tax laws or the use of the State aid provisions in the Treaty on the Functioning of the European Union (TFEU) for measures against BEPS, need of compliance with general principles of European Union law for implementing measures, and limiting the deduction of payments.

The article offers information on the compatibility of Organisation for Economic Co-operation & Development's (OECD) Base Erosion and Profit Shifting (BEPS) Action 2 for neutralising the effects of hybrid mismatch arrangements of tax policies in the European Union Countries. Topics discussed include amendments of domestic laws and tax treaties, difficulties to draft proposed provisions to be in compliance with European Union law, and the Treaty on the Functioning of the European Union (TFEU).

The article offers information on the Base Erosion and Profit Shifting (BEPS) proposals to neutralise the effects of hybrid mismatch arrangements for tax policies in European Union countries. Topics discussed include compatibility with the non-discrimination provisions in tax treaties and treaty on the functioning of the European Union, compatibility with the interest and royalty directive, and double deductions tax planning.

The article discusses Section 73 and Schedule 16 of Great Britain's Finance Act 2014 which deal with oil contractor activities, ring-fence trade, and Great Britain's Her Majesty's Revenue & Customs (HMRC) agency. Oil contractor profits which are derived from operating specified assets in Great Britain's continental shelf and territorial waters are mentioned. British tax deductions and Double Tax Treaty tax allocation rights are assessed. The British Corporation Tax Act 2010 is examined.

The article discusses the reported evolution of permanent establishment (PE) provisions in Chinese tax treaties between 1983 and 2013, focusing on various economic, regulatory and institutional changes which have apparently taken place in China. The alleged impact of PEs on China’s international tax policy is addressed, along with the Organisation for Economic Co-operation & Development's Model Tax Convention on Income and on Capital. Double taxation conventions are also examined.

The article presents a critique of the Vienna Convention on the Law of Treaties 1969's rule of interpretation concerning its application to plurilingual (tax) treaties, focusing on the concept that courts may in good faith rely on a single authenticated text for the purposes of routine interpretation as long as no difficulty arises in the form of an ambiguity or obscurity. The treaty-related French Supreme Administrative Court case Société Natexis Banques Populaires v. France is examined

The article describes the treaty network of Hong Kong regarding double taxation agreement (DTA). It explains why various OECD countries have collaboration with Hong Kong's DTA in light of base erosion and profit shifting (BEPS), which related to tax planning strategies that exploit gaps in tax rules to make profits disappear for tax purposes. It reflects whether Australia, the U.S. and Germany are being sensible by remaining aloof from Hong Kong's DTA.

The article reflects the need of multilateral instruments for achieving the action plans of the base erosion and profit shifting (BEPS). It focuses on the double tax conventions and demand of multilateral response in multinational business organizations. It further discusses the scope of multilateral instruments in achieving double tax conventions.

The article focuses on the Action 7 for the base erosion and profit shifting (BEPS) of the Organisation for Economic Co-operation and Development (OECD). It states the action is related to the permanent establishment rules regarding the double tax convention model of OECD. It suggests the operations related to the fixed place of business rule.

The article analyzes the First-tier Tribunal's decision in Commissioners for HMRC v. George Anson concerned with the problem of double taxation of income. It informs that Anson was levied charge of taxation by jurisdictions of two different states due to his hybrid income earning. The court held its decision in favor of HMRC after interpreting the UK/US Double Tax Conventions.

In this article, the author discusses complex discrimination and disadvantages in tax law in the International Taxation system. It informs that non-discrimination clauses in tax treaties require equal treatment in respect to amount of taxation and administrative burden. It mentions that tax payer can rely on the model tax convention by Organisation for Economic Co-operation and Development (OECD) to claim a tax advantage.

The article focuses on the Organisation for Economic Co-operation and Development (OECD) 2003 Model Tax Convention on Income and on Capital, which dealt with double tax conventions. Topics include cross-border anti-avoidance rules, bilateral tax treaties, and domestic laws affecting cross-border transactions.

The article focuses on the Great Britain's influence on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention. Topics include the issue of double taxation, the rise in tax global tax rates after World War I, and origin taxation proposals. Information is provided on various tax treaties involving Great Britain.

The article focuses on beneficial ownership in relation to the Organisation for Economic Cooperation and Development (OECD) Model Tax Convention on Income and on Capital. Topics include the standards related to beneficial ownership, the application of reduced withholding tax rates, and double taxation treaties.

The article focuses on the tax administration in the European Union (EU). It mentions the relationship between the taxpayer and tax collectors based in EU Member States when determining the impact on direct taxation of EU law and political activity. It highlights the mutual assistance provisions of bilateral tax conventions and the Finance Act. It presents critical developments affecting EU tax authorities.

The article offers information on Great Britain's tax treaty developments. The British government has inked two protocols to current double taxation arrangements (DTA) with South Africa and Mauritius as well as signed several comprehensive DTA with Bahrain, Germany, and Hong Kong. It discusses the Exchange of Information articles, the Real Estate Investment Trusts (REIT) dividends, and the pension scheme.

The article discusses Section 292 of Great Britain's Finance Act 2014 which deals with relief for foreign tax under Great Britain's double tax relief (DTR) rules, focusing on British legislative amendments and anti-avoidance measures. Payments by overseas tax authorities are mentioned, along with British tax credits and deductions. Great Britain's Corporation Tax Act 2009 is examined, as well as double tax treaties and non-trading credits which arise from loan relationships.