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Digital Taxation on the Verge of BEPS 2.0: Some Preliminary Policy Considerations

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WCLF Tax und IP Gesprächsband 2019

Zusammenfassung

Just like the Germans celebrated by Tacitus, tax challenges posed by Digital Economy have been “magistrimuphati quam victi” in the latest years by the OECD.

Marco Greggi is Professor of Tax Law at the University of Ferrara (Italy), Yan Xu is Professor and Director of the Centre for Comparative Law at the China University of Political Sciences and Law, Beijing (yanx01@cupl.edu.cn), Yan He is Lecturer in tax law at the Capital University of Business and Economics, Beijing (yan.he@cueb.edu.cn).

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Notes

  1. 1.

    Publius Cornelius Tacitus, Germania, 37.

  2. 2.

    Raffaele Russo, “Base Erosion and Profit Shifting,” in The Challenge of the Digital Economy: Markets, Taxation and Appropriate Economic Models, ed. F. Boccia and R. Leonardi (London: Palgrave Macmillian, 2017), 39.

  3. 3.

    Giulio Tremonti, “Il Futuro Del Fisco,” in Nazioni Senza Ricchezza e Richezze Senza Nazione, ed. Giulio Tremonti et al. (Bologna: Il Mulino, 1993), 57.

  4. 4.

    Arthur Cockfield, “BEPS, and Global Digital Taxation,” Tax Notes International 75, no. 11 (2014): 933–40.

  5. 5.

    See in general Brigitte Alepin, Blanca Moreno-Dodson, and Louise Otis, Winning the Tax Wars: Tax Competition and Cooperation (Alphen aan den Rijn: Kluwer, 2017).

  6. 6.

    OECD, “Addressing Base Erosion and Profit Shifting,” Paris: Organisation for Economic Cooperation and Development (Paris, 2013).

  7. 7.

    Reuven S. Avi-Yonah, “International Taxation of Electronic Commerce,” Tax Law Review 52, no. 3 (1997): 507.

  8. 8.

    See Marco Greggi, “Transfer Pricing and Tax Law—BEPS Actions 8, 9, 10 and the Italian System: An Assessment,” in WCLF Tax Und IP Gesprächsband 2017, ed. Kraft Wolfgang (Wiesbaden: Springer Fachmedien Wiesbaden, 2019), 205–20.

  9. 9.

    All the references to paragraphs are intended to the OECD Proposal on Pillar I.

  10. 10.

    OECD, “Secretariat Proposal for a ‘Unified Approach’ under Pillar One” (Paris, 2019).

  11. 11.

    OECD. At page 5.

  12. 12.

    OECD. At page 5.

  13. 13.

    OECD. At page 6.

  14. 14.

    OECD. At page 13.

  15. 15.

    OECD. At page 8.

  16. 16.

    OECD. At page 14, footnote 8.

  17. 17.

    Russo, “Base Erosion and Profit Shifting”; Anne Michèle Bardopoulos, ECommerce and the Effects of Technology on Taxation: Could VAT Be the ETax Solution ? (Berlin: Springer, 2015); Avi-Yonah, “International Taxation of Electronic Commerce.” See also Eric Kemmeren, “Should the Taxation of the Digital Economy Really Be Different?,” EC Tax Review 27, no. 2 (2018): 72–73; Frans Vanistendael, “Digital Disruption in International Taxation,” Tax Notes International 89, no. 2 (2018): 175–79; Krister Andersson, “Taxation of the Digital Economy,” Intertax 45, no. 10 (2017): 590–92.Maartens Floris de Wilde, “Comparing Tax Policy Responses for the Digitalizing Economy: Fold or All-In,” Intertax 46, no. 6/7 (2018): 466–75; P.M. Tatarowicz and D. Jansen, “Digital Taxation: A View from the United States and France,” Tax Notes International 90, no. 10 (2018): 1055–58.

  18. 18.

    OECD, “Addressing Base Erosion and Profit Shifting”; OECD, “Action Plan on Base Erosion and Profit Shifting” (Paris, 2013), www.oecd.org; Nathalie Bravo et al., “Implementing Key BEPS Actions: Where Do We Stand?,” Intertax 45, no. 12 (2017): 852–63; Pascal Saint-Amans and Raffaele Russo, “OECD: What the BEPS Are We Talking About?,” Ta Notes International, OECD Forum, 70, no. 4 (2013): 339–40; Louis E. Schoueri, “Transparency Under the BEPS Plan: What Holistic Approach?,” Kluwer International Tax Blog, 2015, http://www.kluwertaxlawblog.com/blog/2015/06/24/13300/; OECD, “BEPS Action 1: Address the Tax Challenges of the Digital Economy” (Paris: OECD, 2014).

  19. 19.

    COM(2018) 147 final, Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence; COM(2018) 148 final, Proposal for a Council directive on the common system of a digital.

    services tax on revenues resulting from the provision of certain digital services. Both the proposal were published on March 22nd 2018.

  20. 20.

    José Ángel Gómez Requena and Saturnina Moreno González, “Adapting the Concept of Permanent Establishment to the Context of Digital Commerce: From Fixityto Significant Digital Economic Presence,” Intertax 45, no. 11 (2017): 732–41.

  21. 21.

    In regulating Exit taxation, for instance, Italy make direct reference to the OECD inspired guidelines directly in the law. In this way, any further change OECD decides in regulation outbound taxation become immediately binding hard law for domestic purposes (see Italian Income Tax Act December 22nd 1986, n. 917, Article 116, § 2).

  22. 22.

    OECD, “Secretariat Proposal for a ‘Unified Approach’ under Pillar One.”

  23. 23.

    OECD, “Global Anti-Base ERosion Proposal (‘GloBE’) Pillar Two” (Paris, 2019).

  24. 24.

    See for instance the Report on the French Digital Services: Tax Office of the United States Trade Representative, “Report on France’s Digital Services Tax” (Washington, 2019). See also Tatarowicz and Jansen, “Digital Taxation: A View from the United States and France.”

  25. 25.

    The idea of the extraprofitallegedly deriving from the use of Digital structures (and therefore to be taxes appropriately) appears to echo the Marxist vision of the economy, where however in the Philosopher’s view in the XIX Century it derived from the (brutal) exploitation of the working class. The adaptation to some of the Marxist concepts to the current historical period (with a specific focus to the extraprofits of the case) can be found in Thomas Piketty, La Capital Au XXI Siècle (Paris: Editions du Seuil, 2013). In the Italian version of the book (Il Capitalenel XXI Secolo), Milano, 2014, reference is to page 339 and sub.

  26. 26.

    Reuven S. Avi-Yonah, “Between Formulary Apportionment and the OECD Guidelines: A Proposal for Reconciliation,” World Tax Journal 2, no. 1 (2010): 3–18; Reuven S. Avi-Yonah, Kimberly A. Clausing, and Michael C. Durst, “Allocating Business Profits for Tax Purposes: A Proposal to Adopt a Formulary Profit Split,” Florida Law Review 9, no. 5 (2011): 497; Heinz Klaus Kroppen, Roman Dawid, and Richard Schmidtke, “Profit Split, the Future of Transfer Pricing? Arm’s Length Principle and Formulary Apportionment Revisited from a Theoretical and a Practical Perspective,” in Fundamentals of International Transfer Pricing in Law and Economics, ed. Wolfgang Schön and Kai A. Konrad (Berlin: Springer, 2012), 267–93; Vikram Chand and Sagar Shekhar Wagh, “The Profit Split Method: Status Quo and Outlook in Light of the BEPS Action Plan,” SSRN Electronic Journal, 2015.

  27. 27.

    Corey Williams, “Net Neutrality,” Behavioral & Social Sciences Librarian 25, no. 2 (2007): 93–98; Gerald R. Faulhaber, “Economics of Net Neutrality: A Review,” Communications & Convergence Review 3, no. 1 (2011): 53–64; Rohit Prasad and V. Sridhar, “The Economics of Net Neutrality,” Economic and Political Weekly, 2014; Nicholas Economides, “‘Net Neutrality’, Non-Discrimination and Digital Distribution of Content Through the Internet,” NYU Law and Economics Research Papers (New York, 2011); Johannes M. Bauer and Jonathan A. Obar, “Reconciling Political and Economic Goals in the Net Neutrality Debate,” Information Society 30, no. 1 (2014): 1–19.

  28. 28.

    This would be true for the extra-profits as for the guidelines in Pillar I.

  29. 29.

    As on December 3rd2019 more than 130 Countries have joined the inclusive framework and more than 85have joined the Multilateral conventions (https://www.oecd.org/tax/beps/about/).

  30. 30.

    ON the necessity for a tighter democratic control on tax policy decisions see Marco Greggi, “The Painful Europeanisation of Taxes: Democratic Implications,” in The Sinews of Peace: Democratising the Political Economy of the European Union, vol. 7 (Oslo, 2009), 469–509, http://www.reconproject.eu/projectweb/portalproject/LeonSep08.html.

  31. 31.

    See for further criticism on the BEPS project Yariv Brauner, “What the BEPS?,” Florida Tax Review 16, no. 2 (2014): 55–115; Laurens van Apeldoorn, “BEPS, Tax Sovereignty and Global Justice,” Critical Review of International Social and Political Philosophy 21, no. 4 (2018): 478.

  32. 32.

    See footnote 25 above.

  33. 33.

    OECD, “BEPS Action 1: Address the Tax Challenges of the Digital Economy.”

  34. 34.

    Marco Greggi, Rise and Decline of the Wesphalian Principle in Taxation: the Web Tax Case, EC Tax Law, 2020 (undr publication).

  35. 35.

    OECD, “Secretariat Proposal for a ‘Unified Approach’ under Pillar One.”See pages 13, 14 and 15.

  36. 36.

    Marco Greggi, “The Protection of Human Rights and the Right to a Fair Tax Trial in the Light of the Jussila Case,” Intertax 35, no. 11 (2007): 610–15.

  37. 37.

    The two calls for feedback on Pillar I and II proposal have received hundreds of feedback available online. See for instance, for Pillar II, https://www.oecd.org/tax/oecd-secretariat-invites-public-input-on-the-global-anti-base-erosion-proposal-pillar-two.htm.

  38. 38.

    A simple query on the internet with “BEPS OECD” keywords returns more than 750.000 hits. Google Scholar returns more than 11.200 hits as on December 3rd 2019.

  39. 39.

    The impact of the several revolutions on the value creation chains (and therefore implicitly on taxation) has been recently addressed by Mariana Mazzucato, The Value of Everything (London: Allen Lane, 2018). See page 8 and sub.

  40. 40.

    Francis Fukuyama, The End of History and the Last Man (New York: Free Press, 1992).

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Authors and Affiliations

  1. University Ferrara, Ferrara, Italien

    Marco Greggi

  2. University of Business and Economics, Peking, China

    Yan He

  3. Centre for Comparative Law at the China, Peking, China

    Yan Xu

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  1. Marco Greggi
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  2. Yan He
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Correspondence to Marco Greggi .

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    Wolfgang W. Kraft

  2. Mainfort GmbH, Frankfurt am Main, Deutschland

    Andreas Striegel

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Greggi, M., He, Y., Xu, Y. (2021). Digital Taxation on the Verge of BEPS 2.0: Some Preliminary Policy Considerations. In: Kraft, W.W., Striegel, A. (eds) WCLF Tax und IP Gesprächsband 2019. Springer Gabler, Wiesbaden. https://doi.org/10.1007/978-3-658-32073-7_8

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