Resolving double taxation in a global environment – when might it impact on deal value? Consideration of the availability of mutual agreement procedures and arbitration

2018 ◽  
Vol 58 (2) ◽  
pp. 501
Author(s):  
Sarah Blakelock ◽  
George Hempenstall
Keyword(s):  
Oil And Gas ◽  
Transfer Pricing ◽  
Global Environment ◽  
Risk And Uncertainty ◽  
Double Taxation ◽  
Tax Base ◽  
It Impact ◽  
International Tax ◽  
Mutual Agreement

Multinationals are under increasing scrutiny by revenue authorities across the globe. The heightened risk of tax audits, transfer pricing adjustments and the potential for double taxation mean that it is more important than ever for multinationals to consider what strategies are available to resolve international tax disputes. Inherent tax risk and uncertainty creates unique challenges for oil and gas multinationals as it can impact on deal value where double taxation arises. This is because countries are increasingly behaving like companies – competing to preserve and defend their tax base. With the Organisation for Economic Co-operation and Development’s (OECD’s) Multilateral Instrument pending ratification by the Australian Parliament, this paper considers the availability and practical use of the mutual agreement procedure (MAP) for the resolution of double taxation. Additionally, the paper provides an overview of which jurisdictions have opted to adopt arbitration as a mechanism to resolve double taxation disputes where the MAP has failed.

scholarly journals TAX TREATY ARBITRATION

2018 ◽  
pp. 21-36
Author(s):  
DANIL VINNITSKIY ◽  
ANDREY SAVITSKIY ◽  
EVGENIY PUSTOVALOV
Keyword(s):  
Research Methods ◽  
Legal Regulation ◽  
International Arbitration ◽  
Double Taxation ◽  
Functional Interpretation ◽  
Cross Border ◽  
The Cross ◽  
International Tax ◽  
Tax Arbitration ◽  
Mutual Agreement

Introduction: this article reviews the cross-border tax disputes resolution practice in Russia and evaluates the prospects for the development of new mechanisms for the resolution of tax disputes arising from cross-border relations, including tax arbitration. In recent years, the development of international instruments for eliminating double taxation and resolving tax disputes within OECD and G20 multilateral formats as well as bilateral agreements on avoidance of double taxation have led to the growing interest in this paper’s topic. The purpose of this paper is to determine / identify an optimal mechanism for the cross-border tax disputes resolution in Russia, taking into account the current domestic legal regulation and international commitments in the field of cross-border taxation. Methods: given the nature of this research, we have used the general scientific and individual scientific research methods. We have also used legal research methods such as comparative legal and formal legal methods, logical, systemic, and functional interpretation. The recent academic literature on the particular aspects of this research has been investigated too. Analysis: the practice in the application of international tax agreements in Russia demonstrates that the cross-border tax disputes are mainly resolved within the framework of domestic judicial procedures. Mutual agreement procedures and tax arbitration are not common mechanisms for resolving cross-border tax disputes in Russia. Meanwhile, the international investment disputes affecting particular aspects of taxation are often dealt through international arbitration institutions. Results: as a part of the commitments made under the Multilateral Instrument (MLI), Russian Federation considers arbitration and mutual agreement procedures only as possible alternative ways to settle cross-border tax disputes arising from international tax agreements. Based on the well-known cross-border tax disputes resolution practice, we conclude that none of the states could completely isolate itself from the international arbitration procedures in the current circumstances. This is true even if such state did not include the arbitration clause in its tax agreements and did not make the commitments on tax arbitration under the Multilateral Instrument (MLI).

U.S. Advance Pricing Agreement: An Option to Resolve International Tax Dispute in Transfer Pricing Cases

1997 ◽  
Vol 1 (1) ◽  
pp. 115-133
Author(s):  
Min Park
Keyword(s):  
Transfer Pricing ◽  
Competent Authority ◽  
Safe Harbor ◽  
Double Taxation ◽  
Traditional Methods ◽  
Allocation Method ◽  
Advance Pricing Agreement ◽  
International Tax

Obtaining a preliminary approval from its tax authority as to its mehodologies of transfer pricing would provide taxpayers with a safe harbor. This preliminary measure provides positive assurance against unexpected income allocation adjustments made by the tax authority. Such a procedure is commonly referred to as an “Advance Pricing Agreement(APA).” In order to be an effective income allocation method, an APA must be an either binational or multinational. Only binational or multinational APA could supplement the judicial, administrative, and treaty mechanisms for resolving transfer pricing issues related to income allocation when the traditional methods fails or are difficult to apply. The binational APA negates the need to obtain APAs from two tax authorities and reduces the possibility of lengthy competent authority audits and negotiation. Thus, the binational APA can decreases burdens on both the taxpayers and tax authorities, and also helps avoid the risk of double taxation.

Australian oil and gas: maximising inbound investments—tax risks and opportunities

2015 ◽  
Vol 55 (2) ◽  
pp. 431
Author(s):  
Belinda Townsend
Keyword(s):  
Oil And Gas ◽  
Transfer Pricing ◽  
Regulatory System ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Strategic Investment ◽  
Investment Financing ◽  
International Tax ◽  
The Stability

The ability for Australia to attract and retain foreign capital is crucial to the continued expansion and long-term development and sustainability of Australia’s oil and gas industry. A well-known and accepted competitive advantage, which facilitates inbound investment into the Australian oil and gas industry, is the stability of Australia’s tax and regulatory system. Having said this, inbound investors are faced with numerous challenges in seeking to navigate and understand Australian tax issues associated with not only ensuring the successful completion of a transaction but to also manage their ongoing after-tax return on investment. These investors are exposed to Australia’s complex international tax landscape, given the level of cross-border investment, financing, profit repatriation, transfer pricing and exit/sell down issues. The key is for inbound investors to understand, monitor and pro-actively manage their international tax affairs as efficiently and effectively as possible. This extended abstract is targeted on assisting inbound investors to understand key considerations associated with investment ownership in the Australian oil and gas industry, and to assist those investors in making strategic investment decisions and to better understand tax risks and opportunities. The topics covered will include: Key tax drivers and considerations associated with executing transactions successfully. Structuring inbound oil and gas investments into Australia. Investment funding and profit repatriation strategies. Transfer pricing and related company transactions. Exit and sell down strategies.

scholarly journals Good practice for transfer pricing in selected OECD countries

2020 ◽  
Vol 64 (9) ◽  
pp. 119-130
Author(s):  
Magdalena Szymczak
Keyword(s):  
Transfer Pricing ◽  
Good Practice ◽  
Oecd Countries ◽  
Enterprise Management ◽  
International Organisations ◽  
Tax Base ◽  
Member States ◽  
Good Practices ◽  
The Past ◽  
Mutual Agreement

Over the past decades the use of transfer pricing has increased significantly. It was noted that transfer pricing impacts on many areas of enterprise management. Countries, observing the gravity of the issue and taking care of securing their tax base, began to adopt regulations governing this matter. To meet the needs of both enterprises and regulators, international organisations have been working on developing guidelines and promoting them to adopt regulations on transfer pricing that are as clear and transparent as possible. Good practices included in the OECD Guidelines have become the most universally applicable. The paper aims to assess internationally developed solutions regarding transfer pricing based on the example of good practices contained in the OECD Guidelines regarding advance pricing agreements and mutual agreement procedures. The analysis covered all OECD Member States.

scholarly journals Resolution of Dual Residence Instances in the Case of Companies

2020 ◽  
pp. 111-129
Author(s):  
Lidija Živković
Keyword(s):  
Historical Development ◽  
Action Plan ◽  
Special Focus ◽  
Effective Management ◽  
Profit Shifting ◽  
Double Taxation ◽  
Tax System ◽  
New Approach ◽  
International Tax ◽  
Mutual Agreement

The application of double taxation treaties presupposes that the potential cases of dual residence have been previously resolved. For this purpose, the major model-conventions on the basis of which double taxation treaties around the globe are negotiated contain the so-called tie-breaker rule. In the wake of the recent revision of the international tax system resulting from the OECD’s Base Erosion and Profit Shifting Action Plan, the existing tie-breaker rule for companies has been thoroughly amended. Instead of determining companies’ residence based on the place of the effective management criterion, the new approach stipulates that such cases will be decided through the application of the Mutual Agreement Procedure, between the competent authorities of the relevant contracting states. After outlining the historical development of the said mechanism in the context of dual residence resolution, this article purports to critically assess its desirability, with a special focus on its implementation in Serbia.

Risk and uncertainty in applied problems of oil and gas economy

2019 ◽  
pp. 30-33
Author(s):  
A.F. Andreev ◽  
◽  
E.V. Burykina ◽  
G.N. Buliskeriya ◽  
◽  
...  
Keyword(s):  
Oil And Gas ◽  
Risk And Uncertainty

scholarly journals The Use of International Tax Planning in Subsidiaries from the Financial and ICT Sectors in the Czech Republic

2021 ◽  
Vol 24 (1) ◽  
pp. 182-196
Author(s):  
Vít Jedlička
Keyword(s):  
Global Economy ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Tax Planning ◽  
Tax Burden ◽  
Effective Tax Rate ◽  
Tax Havens ◽  
Tax Rate ◽  
Dummy Variable ◽  
International Tax

Tax avoidance is an important element of management in the global economy. Managers use tax havens for reducing a company’s effective tax rate. The most common practices in international tax planning can be divided into three groups: loans and their related interest, royalties, and transfer pricing. The aim of this article is to find the determinants of the tax burden faced by foreign-owned subsidiaries. Therefore, a model was created for the tax burden, focusing on the special position of subsidiaries within international tax planning. For this purpose, taxes/outcomes was established as a new dependent variable. The panel data used include Czech companies that are owned by parent companies located in other EU countries. The model distinguishes EU tax havens from regular member states; sector dummy variables are also included. The regression model that was created did not confirm the assumed dependencies. Rather, it indicated other important determinants: profitability, the share of intangible assets, size, and the dummy variable for the ICT sector. Based on the regression results, the independent variables connected with known tax planning schemes have relatively low importance. The significance of these results can be seen in the subsequent conclusions. First of all, there is no difference between the subsidiaries’ tax burdens based on the parent company’s location. Corporations use international tax planning whether or not they are owned from a tax haven. The second significant conclusion indicates the importance of certain sectors and their attributes concerning the tax burden. Companies from the ICT sector are linked to a lower tax burden. On the other hand, the dependencies within the financial sector are not statistically significant. From the perspective of further research, it would be constructive to incorporate the subsidiary’s position within the group.

scholarly journals Avoiding Double Taxation Through The Assessment of International Tax Treties. Case: ESP’s versus Anaf Braşov

2019 ◽  
Vol 23 (37) ◽  
pp. 1-15
Author(s):  
Florin Dumiter ◽  
Ștefania Amalia Jimon ◽  
Florin Gheorghe Bene
Keyword(s):  
Best Practices ◽  
Moral Hazard ◽  
Legal Framework ◽  
International Taxation ◽  
Double Taxation ◽  
Asymmetrical Information ◽  
Treaty Shopping ◽  
International Tax

Abstract International double taxation represents one of the main problems’ for which taxpayers have to deal within a world fulfilled with globalization, uncertainty, risk, asymmetrical information and moral hazard. In this sense, in this article it is provided a qualitative overview regarding the appearance and evolution of the main double taxation conventions and their legal framework. In this article it is tackled some important issues, namely: the rationale behind the construction and engaging in double taxation conventions; the need for a coherent and just application of those conventions; the historical appearance and evolution of the double taxation conventions, as well as the quid pro quo OECD Model Convention and UN Model Convention. The conclusions of this article highlight the importance and ultimately need for construction of best practices new and complex multilateral tax convention at the UE level in order to diminish the contagious effects of the treaty shopping practices. The case study presented in this article from the Romanian jurisprudence highlights the multi-faced concept of double taxation and the comprehension approach which must be undertaken in order to solve the complex issues of the international taxation via double taxation treaties.

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