Tax Treaty Aggressiveness: Who is Undermining Taxing Rights in Africa?

Tax avoidance strategies by multinational companies rely heavily on tax treaties. Multinational companies can relocate financial activities across countries to ensure the applicability of the most beneficial tax treaties. This ‘treaty shopping’ can be particularly harmful to African countries, impairing their efforts for domestic resource mobilisation and achieving sustainable development goals. In this paper, we analyse the aggressiveness of tax treaties towards African countries – the extent to which signing tax treaties reduces the taxing rights of African governments. We find that treaties signed with France, Mauritius and the United Arab Emirates reduce withholding tax rates the most, while treaties signed with European countries – and, in particular, the United Kingdom and France – greatly limit other taxing rights, for example, by restricting the scope of permanent establishment definition.

TAXING DIGITAL ADVERTISING: A PROPOSAL TO INDONESIA

Tax on digital economy activities has become a widely discussed issue in the world because of the limitation on the permanent establishment concept in anticipating the digital economy's externalities. The failure of OECD countries to reach digital economic taxation agreements also caused these countries to take unilateral measures in securing their respective interests. Indonesia, as a country with considerable digital economy value in the Southeast Asia region, plans to implement the significant economic presence concept to secure its tax revenue that cannot be captured by PE concept in the digital cross-border transaction. However, the implementation of this new nexus could generate new challenges in the Indonesia taxation system. This study seeks to provide alternatives to the Indonesian government regarding the taxable presence and taxation methods on the digital economy, especially digital advertising, by conducting examination and evaluation through current nexuses, the international proposals, and other countries' experience in addressing tax challenges in the digital advertising.

PERMANENT ESTABLISHMENT. THE CRISIS OF THE ARTICLE 5 OECD MC IN THE DIGITAL ECONOMY

The rise of the digital economy, breaking with business models that require a physical presence to develop their activities, has dislodged the traditional concept of permanent establishment set out in Article 5 OECD MC. In the light of the precept’s loopholes, large multinationals have engaged in abusive practices to relocate their profits, thus avoiding contributing in the States where the income is generated in accordance with their economic capacity. In this paper, we examine the concept of permanent establishment included in art. 5 OECD MC, its typology following the BEPS Project’s modifications and the different scenarios that do not constitute a permanent establishment. We also explore whether its legal regime continues to be useful in today’s context or whether, on the contrary, the moment has come to abandon the concept of permanent establishment entirely due to the problems generated by today’s article 5 OECD MC, unable to respond to the challenges posed by the digital economy.

Redefining Permanent Establishment Concept of e-Commerce Cross-border Transaction: A Preliminary Study in Indonesia

The development of e-commerce transaction has created problems in taxation policy. The tendency of tax avoidance occurs when countries place little attention to mitigate the problem. Most countries, including Indonesia, face the problem of tax avoidance practices as e-commerce practices can bypass States' territorial boundaries.

First Detection of the Adventive Egg Parasitoid of Halyomorpha halys (Stål) (Hemiptera: Pentatomidae) Trissolcus mitsukurii (Ashmead) (Hymenoptera: Scelionidae) in France

We report the first detection of Trissolcus mitsukurii in France. More than 1860 sentinel egg masses of Halyomorpha halys (BMSB) were exposed in the field during the 2018–2020 period, and 12 specimens of T. mitsukurii emerged from one egg mass. Their taxonomic identification was confirmed both by morphological and molecular analysis. Trissolcus mitsukurii, similar to T. japonicus, is an egg parasitoid of BMSB in its area of origin in Asia, and both species are considered to be candidates for a classical biological control strategy against BMSB. Trissolcus mitsukurii was previously recorded in Italy where it is well established and widespread, and this may be the source of the French population. Possible permanent establishment and dispersion of T. mitsukurii in France should be monitored with emphasis on its potential effect on BMSB populations.

Direktiva 2003/49/EZ o zajedničkom sustavu oporezivanja isplate kamata i autorskih naknada između povezanih trgovačkih društava različitih država članica - analiza Direktive i hrvatskog prijevoda nekih termina iz Direktive

U radu su kritički analizirani prijevodi nekih termina u Direktivi EU-a o oporezivanju kamata i autorskih naknada na hrvatski jezik. Riječ je o terminima royalty (autorska naknada), beneficial owner (stvarni korisnik) i permanent establishment (stalna poslovna jedinica). Nakon te analize ukratko je prikazan i sadržajni aspekt Direktive. Službeni prijevod direktiva EU-a važan je, prvo, zbog njihove implementacije u pravne sustave država članica, a zatim i zbog mogućnosti izravne primjene direktiva pod određenim uvjetima. Sadržajno, Direktiva uređuje raspodjelu prava na oporezivanje primitaka od ulaganja (u obliku kamate na zajam i autorske naknade) dajući pravo oporezivanja državi rezidentnosti primatelja kamate i/ili autorske naknade. To je, napose što se tiče kamata na zajmove, bitno odstupanje od koncepta OECD modela ugovora o izbjegavanju dvostrukog oporezivanja. Termini spomenuti u kontekstu njihova prijevoda na hrvatski ključni su tehnički (provedbeni) elementi primjene Direktive.

Creation of service permanent establishment in Russian Federation when providing R&D services by foreign specialists

The subject. The author examines the criteria of creation of service permanent establishment (PE) in Russia and possibility of creation of this type of PE in providing R&D services in Russia by foreign specialists.The aim of the paper is to confirm or refute the hypothesis that the provision of R&D ser-vices by foreign specialists in Russia creates a service permanent establishment. The author also analyzes the current science legislation of Russia and suggests ways of its improvement to reduce tax risks.The methodology. The author used general scientific dialectical method of scientific knowledge, the formal-logical method, in particular analysis and synthesis in examining criteria of creation of service permanent establishment. The author also uses a systematic method and a simulation method to establish the relationship between the science legislation and tax legislation.The main results. The activity of foreign scientific specialists in Russia potentially originates the risk of creation of a permanent establishment on the territory of the Russia for the foreign organization, which sent that specialist to provide the relevant services. However, when comparing the international and domestic law enforcement approach, the author revealed a feature of the latter, which consists in applying the criteria of the physical type of permanent establishment to a service permanent establishment, which in turn gives rise to legal uncertainty and the risk of double taxation in some situations. There is no relevant judicial practice on the topic. Budgetary scientific organizations have a certain priority over commercial scientific organizations when involving foreign specialists in R&D activities in Russia.Conclusions. The criteria for the creation of service permanent establishment (including the provision of R&D services) in domestic practice have an ambiguous, evaluative interpretation. However, the risks of discretion in assessing the criteria for creation of service permanent establishment can be eliminated by clarifying these criteria in the Tax Code of the Russian Federation. Amendments to the science legislation can also eliminate above and fore-going risks.

Permanent establishment as a foreign direct investment in Poland: identification of tax barriers in the context of new tax development

The paper aims to identify the significant tax barriers to foreign direct investment (FDI) in Poland, in particular in the form of a permanent establishment (PE), in the context of new developments in international tax law. Due to the recommendations of the Base Erosion and Profit Shifting (BEPS) project, launched by Organisation for Economic Co-operation and Development (OECD) to prevent international tax avoidance, the understanding of PE has changed, which could lead to changes in business models. The purpose of the research is also to identify the significant tax barriers to economic activity in Poland, in particular in the form of PE, against the international tax law context. The study conducted by the authors relies on the most current tax rulings and judgments of administrative courts issued between 2017 and 2020. It is concluded that not so much the effective tax burdens but the regulatory ambiguity surrounding the tax obligations may contribute to the reduction of Poland's attractiveness as a location for FDI.

Requirements for assuming a permanent establishment under Art. 5 OECD Model Tax Convention

In January 2019, the German Federal Finance Court defined the legally binding requirements with respect to a fixed place of business being a matter of a permanent establishment according to German law, thus the revenue generated being subject to the German taxation.This article addresses the research question ‘Which criteria have to be met by a permanent establishment to be effective for tax purposes?’Regarding the methods, the article reviews relevant literature and case law to identify the prevailing and dissenting opinions on the requirements for assuming a fixed place of business under Art. 5(5) OECD-Model Tax Convention. As to the question whether one can refer to a fixed place of business as a permanent establishment, the courts use to differentiate between Civil Jurisdiction and Common Law. For the sake of clarity, the courts coined the article 5 of the OECD[1] Model Tax Convention. In accordance to the abovementioned Model Tax Convention, binding provisions were defined on the international level for both, countries using the Common Law as well as for those using the Civil Law, with respect to the requirements as to a permanent establishment and the resulting country of taxation to be applied. In doing so, the question arose whether for instance a lockbox would represent a permanent establishment or not.However, the contracting states did not succeed in determining clear requirements as to the existence of the establishment in question. In fact, they left it to the state in question to define their respective double-tax agreements according to their own needs.