The Inclusive Framework is considering radical proposals, but in the real world… – Ben Dickinson
In her recent blog, Allison Christians usefully alerts us to some of the challenges and opportunities of the new rules on international taxationFOR MORE INSIGHT ON INTERNATIONAL TAXATION, PLEASE READ THIS ARTICLE: Introduction to International Taxation: Key Concepts & Guidelines International Taxation encompasses the framework of laws, principles, and treaties that govern the tax obligations of individuals and entities engaged in economic activities that span multiple jurisdictions. This field addresses how income, profits, and gains are taxed when operations or investments extend... being negotiated at the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve.... However, it is important to shed some additional light on the dynamics and context of the Inclusive Frameworkprocess.
The acute tensions we see in the international tax system have indeed come to a head through Europe’s claim for more tax from the US digital companies. However, this ‘great powers’ dynamic among states, as Allison Christians characterises it, is only a small part of a farFunctional analysis is the cornerstone of transfer pricing and international tax compliance, ensuring that intercompany transactions adhere to the arm’s length principle. It evaluates the roles, contributions, and risk profiles of entities within a multinational enterprise (MNE) to determine how profits and costs should be allocated. This process ensures that related-party transactions reflect the pricing that independent enterprises would establish... more complex picture with new alliances at play and in a constant state of flux. The new tax rules are of course being addressed within a legacy—both a legacy of tax rules inspired at the creation of the League of Nations 100 years ago and the legacy of post second word war institutions set up by the ‘great powers’. The attempt to set new global rules requires a move away from these constraints and to address the asymmetries inherent in international negotiations. The process is being played out against the background of an acceleration in treaty-circumventing unilateral measures which seek to impose taxes on gross incomeGross Income is a comprehensive term used to define the total income received by an individual or entity before any deductions, exemptions, or allowances. The concept is central to the calculation of taxable income across different tax jurisdictions. It encompasses a broad range of income sources, such as wages, salaries, business income, dividends, interest, rental income, and other forms of... flows, creating a sense of urgency across the world.
In her recent blog, Allison Christians usefully alerts us to some of the challenges and opportunities of the new rules on international taxationFOR MORE INSIGHT ON INTERNATIONAL TAXATION, PLEASE READ THIS ARTICLE: Introduction to International Taxation: Key Concepts & Guidelines International Taxation encompasses the framework of laws, principles, and treaties that govern the tax obligations of individuals and entities engaged in economic activities that span multiple jurisdictions. This field addresses how income, profits, and gains are taxed when operations or investments extend... being negotiated at the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve.... However, it is important to shed some additional light on the dynamics and context of the Inclusive Framework process.
The acute tensions we see in the international tax system have indeed come to a head through Europe’s claim for more tax from the US digital companies. However, this ‘great powers’ dynamic among states, as Allison Christians characterises it, is only a small part of a farFunctional analysis is the cornerstone of transfer pricing and international tax compliance, ensuring that intercompany transactions adhere to the arm’s length principle. It evaluates the roles, contributions, and risk profiles of entities within a multinational enterprise (MNE) to determine how profits and costs should be allocated. This process ensures that related-party transactions reflect the pricing that independent enterprises would establish... more complex picture with new alliances at play and in a constant state of flux. The new tax rules are of course being addressed within a legacy—both a legacy of tax rules inspired at the creation of the League of Nations 100 years ago and the legacy of post second word war institutions set up by the ‘great powers’. The attempt to set new global rules requires a move away from these constraints and to address the asymmetries inherent in international negotiations. The process is being played out against the background of an acceleration in treaty-circumventing unilateral measures which seek to impose taxes on gross incomeGross Income is a comprehensive term used to define the total income received by an individual or entity before any deductions, exemptions, or allowances. The concept is central to the calculation of taxable income across different tax jurisdictions. It encompasses a broad range of income sources, such as wages, salaries, business income, dividends, interest, rental income, and other forms of... flows, creating a sense of urgency across the world.
The 135 countries in the Inclusive Framework are working together on the new rules in a participatory way. Importantly, they are guided by a strong group of leading countries (a steering group). This group comprises 24 countries from the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve..., G20, and developing countries including in Africa from Ivory Coast, Nigeria, Senegal and South Africa. In this body, ‘the great powers’ include China (vice chair) and India. The dynamics of negotiations here can be counter-intuitive: on some issues, market jurisdictions in Africa may have more in common with the US than the Europeans do with the US or China.
To reach consensus, country delegates negotiate as sovereignties, not in blocks. This may explain why some senior officials from the G24 have distanced themselves from the block view submissions, seeing the dangers of a block mentality damaging the chances of consensus and because of the varied interests of countries in established groupings. Within the G24 grouping, the common ground between low-income countries and advanced middle-income powers, for example, may not help provide useful grounds for compromise or consensus. In the same way, there is no single OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... and no single European view. The closest to a regional view has been set out for many African countries by ATAF. See ATAF’s constructive response to the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... effort here.
The OECD’s work is informed by increasingly diverse staffing. Contrary to Allison Christians’ speculative suggestion, we have many non-OECD nationals in our OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... Secretariat team: Brazilian, Cameroonian, Chinese, Colombian, Costa Rican, Egyptian, Indian, Kenyan and Pakistani to name a few, the result of a derogation to the usual OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... rules granted to staff of the Centre for Tax Policy and Administration to bolster inclusion.
Where we take greatest exception is Christians’ statement that the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... Secretariat’s intention is to restrict discussion. This is the opposite of what is the reality and it is noticeable no basis for this statement is offered. The Secretariat’s role is not to propose solutions that favour one group or another but rather to explore a potential consensus solution that will appeal to states, with the inevitable compromises such a process necessitates. This has involved extensive discussions at many different levels. The process rests not on restricting discussion but on an expansive approach to discussion. The unified approach is the result of finding the common ground between diverse ideas (from all states), interests and positions relating to user contributions, marketing intangibles and significant economic presence. If we succeed in finding a consensus-based solution, commentators will no doubt claim that the result is evolutionary and incremental. Fair enough, but the much-hoped for inclusion of a formulaic approach to taxing rightsFiscal Sovereignty is the inherent authority of a state to independently manage its financial and economic policies, especially the power to levy and collect taxes within its jurisdiction. Central to national autonomy, fiscal sovereignty enables governments to shape economic policies that reflect their priorities, ranging from welfare programs to defence and infrastructure investment. It also underpins each country’s approach to..., a fixed return approach for some functions, and taxing the multinational enterprise group as a whole, are all points that could not have realistically been envisaged even five years ago. Yet, as I write, these elements are now on the table as a realistic part of the proposed package and are welcomed by some of the poorest countries. Suggestions that there is no radical departure from the current rules on international taxationFOR MORE INSIGHT ON INTERNATIONAL TAXATION, PLEASE READ THIS ARTICLE: Introduction to International Taxation: Key Concepts & Guidelines International Taxation encompasses the framework of laws, principles, and treaties that govern the tax obligations of individuals and entities engaged in economic activities that span multiple jurisdictions. This field addresses how income, profits, and gains are taxed when operations or investments extend... are therefore very wide of the mark.
Our committee negotiations can be painful—135 countries effectively playing three dimensional chess—and at times we seem farFunctional analysis is the cornerstone of transfer pricing and international tax compliance, ensuring that intercompany transactions adhere to the arm’s length principle. It evaluates the roles, contributions, and risk profiles of entities within a multinational enterprise (MNE) to determine how profits and costs should be allocated. This process ensures that related-party transactions reflect the pricing that independent enterprises would establish... removed from the realities of tax administrationTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... in hard-pressed countries where revenues are tight. There may be a gap as well between those on the outside, and the views and interests of others they claim to represent, and what countries are actually trying to negotiate in the real world.
The acute tensions we see in the international tax system have indeed come to a head through Europe’s claim for more tax from the US digital companies. However, this ‘great powers’ dynamic among states, as Allison Christians characterises it, is only a small part of a farFunctional analysis is the cornerstone of transfer pricing and international tax compliance, ensuring that intercompany transactions adhere to the arm’s length principle. It evaluates the roles, contributions, and risk profiles of entities within a multinational enterprise (MNE) to determine how profits and costs should be allocated. This process ensures that related-party transactions reflect the pricing that independent enterprises would establish... more complex picture with new alliances at play and in a constant state of flux. The new tax rules are of course being addressed within a legacy—both a legacy of tax rules inspired at the creation of the League of Nations 100 years ago and the legacy of post second word war institutions set up by the ‘great powers’. The attempt to set new global rules requires a move away from these constraints and to address the asymmetries inherent in international negotiations. The process is being played out against the background of an acceleration in treaty-circumventing unilateral measures which seek to impose taxes on gross incomeGross Income is a comprehensive term used to define the total income received by an individual or entity before any deductions, exemptions, or allowances. The concept is central to the calculation of taxable income across different tax jurisdictions. It encompasses a broad range of income sources, such as wages, salaries, business income, dividends, interest, rental income, and other forms of... flows, creating a sense of urgency across the world.
