_1624512672.jpg)
New Delhi: India Economic Laws Practice and The Dialogue today released a white paper titled Taxation of Digitalized Economy: Analysing the United Nations Article 12B Solution which analyzes Article 12B (approved by UN to be added in the UN Model Tax Convention to include "Automated Digital Services") given the context of bilateral and multilateral tax treaties.
Economic Laws Practice and The Dialogue today released a white paper titled Taxation of Digitalized Economy: Analysing the United Nations Article 12B Solution which analyzes Article 12B (approved by UN to be added in the UN Model Tax Convention to include "Automated Digital Services") given the context of bilateral and multilateral tax treaties. This white paper then deep dives to discuss if Article 12B does indeed provide a viable solution. This report assumes even more significance given the recent G7 discussions on global taxation.
Article 12B appears to be a simple solution, it could however trigger several challenges on the implementational and technical grounds which are evaluated in the white paper.
The white paper covers a comparison between Article 12B and the OECD Inclusive Framework, both of which are trying to address the issues around taxation and increased digitalization.
Stella Joseph, who is a partner at ELP and co-author of this whitepaper suggests that “Given the dynamic geo-political shifts, working towards a multilateral solution seems to be the best way forward to address global tax challenges in digital services. The recent G7 agreement on their commitment to counteract tax issues also lays a strong foundation for the G-20 meeting in July 2021.”
Worrying issues such as ring fencing which may give governments an opportunity to unilaterally impose tax measures for business models outside the scope of ADS have been discussed in detail in the report. Designing international tax rules based on sector-specific definitions and including only specific business models will prove too limited conceptually to result in a system fit for the long term.
Another angle covered in the report is that of gross based taxation issues versus net based taxation issues and discusses why MNE’s may be deterred from operating in certain markets.
“There is a greater need for all the countries to be on the same page on this issue be it developing or developed. Given the current economic situation globally, businesses need certainty. A multilateral international consensus-based framework would be the most prudent way forward to address tax challenges of digitalization,” says Nishant Shah, Partner at ELP.
Finally, the report discusses the implementation and enforceability challenges of Article 12B. Implications of dispute resolution, double or multiple taxations, and significant increase in compliance cost for the MNEs.
Kazim Rizvi, Founding Director of The Dialogue noted that “In the constantly evolving environment of increasing digitalisation, there is a need for a stable tax regime which provides certainty and uniformity to the businesses. Towards this, there is a need for a global framework on which there is a consensus among the countries. This white paper attempts to analyse the viability of Art 12B as a solution to such complex issues by analysing it from both technical and policy standpoint."
Gurugram, India – October 11, 2023: Samsung announced exciting offers
Bangalore, 10th October 2023: The Nokia G42 5G (16GB+256G
Bengaluru, October 10, 2023 IN-SPACe (Indian National Space Promotion and
New Delhi, October 3, India- Philips India announces an exciting co
Jaipur, 18 April: Students of Jaipur have recently shown their remarkable achievement in the UPSC Civil Services Examination-
· Technopark-based Lifology holds conversation on IER 2024
Thiru
The New MOTIV Mix™ Interface Simplifies Audio Workflow and Ensures Perfect Recordings, Every Time
<
Business / 18-04-2024
STUDENTS OF JAIPUR'S JAYSHREE PERIWAL HIGH SCHOOL BRING LAURELS TO SCHOOL IN UPSCBusiness / 18-04-2024
India Employment Report pitches for policy to promote jobsBusiness / 18-04-2024
The EMAK Festoon Silent Heroes Awards-24 Concludes at Le Méridien, KochiBusiness / 18-04-2024
Axis AMC elevates R Sivakumar to Head of Corporate StrategyBusiness / 18-04-2024
Celebrate Baby Massage Day with Johnson's Baby Oil: The Perfect Choice to help nourish your little one’s skin from day 1Pelikken © Copyright 2022, All Rights Reserved
