Double Taxation Research Articles

Which is more attractive for structuring investments into Vietnam: The (New) Hong Kong-Vietnam or the Singapore-Vietnam Double Taxation Agreement?

Which is more attractive for structuring investments into Vietnam: The (New) Hong Kong-Vietnam or the Singapore-Vietnam Double Taxation Agreement?

Resolving Cross-Border Tax Disputes: An In-Depth Analysis of Double Taxation Avoidance Agreements With A Special Emphasis on The Vodafone Case

Resolving Cross-Border Tax Disputes: An In-Depth Analysis of Double Taxation Avoidance Agreements With A Special Emphasis on The Vodafone Case

Understanding the Impact of OECD BEPS Actions on Double Tax Treaties

Understanding the Impact of OECD BEPS Actions on Double Tax Treaties

Information asymmetry in non-US stocks: The compounding and mitigating effects of tax havens and corruption

This study examines the role of a country's position as a tax haven and its corruption level in the information asymmetry of non-United States (U.S.) stocks listed on the New York Stock Exchange. Based on the findings, non-U.S. stocks from countries with more pronounced attributes of tax havens and corruption levels have a higher probability of information-based trading and lower market liquidity. Meanwhile, a deeper analysis into the individual attributes of tax havens reveals that the main drivers of these effects include weak anti-avoidance measures and legal complexities, with lesser effects from double tax treaties. In addition, the influence of a country's corruption level on information asymmetry primarily depends on its position as a tax haven, with the highest levels of information asymmetry occurring in jurisdictions that possess strong tax haven attributes and high corruption levels. The implication of the findings is that reducing the influence of global tax havens, especially in regions with high corruption levels, can enhance market liquidity, ultimately benefiting investors and contributing to the overall stability and efficiency of financial markets.

Double Tax Avoidance Agreement and Its Legal Regulation: Taking China as an Example

Double tax avoidance agreements (DTAs) play a pivotal role in facilitating international trade, exemplified by China's proactive engagement in 1983 when it signed its first bilateral tax agreement with Japan. Germany and numerous other countries have followed suit, recognizing the importance of these agreements in mitigating tax-related impediments to cross-border commerce. China's commitment to DTAs is clearly manifested in its extensive network of agreements, as corroborated by the OECD's comprehensive list. Remarkably, China has established DTAs with 102 countries and regions, underscoring their global significance not only for China but for nations worldwide. This article comprehensively explores the subject matter. It commences by elucidating the fundamental concepts and principles underpinning DTAs, followed by an examination of their legal regulations and distinctive attributes. Furthermore, it delves into the potential risks inherent in these agreements and their consequential impacts on international trade and fiscal policies. A more concrete understanding is provided through an in-depth analysis of specific DTAs, with a primary focus on the China-US and China-India agreements. By dissecting these pivotal agreements, the article aims to illuminate the legal frameworks that govern international taxation, thus enhancing comprehension of their implications for global economic cooperation and trade.

Exit Taxation and the DTT Between Poland and Brazil

The article addresses the issue of double taxation elimination in cases involving the application of an exit tax under the DTT between Poland and Brazil, which was signed in 2022. The author explains the key characteristics of the Polish exit tax and then elaborates on an appropriate allocation rule in the context of exit taxation. The article also discusses Article 24 of the Polish-Brazil DTT, which deals with double taxation. Finally, the author presents the specific solutions adopted in other countries’ double taxation treaties to eliminate double taxation in cases where an exit tax is imposed.

The Remuneration of Teachers and Researchers under Art. 21 of the Brazil-Poland Double Taxation Convention of 2022 in the Light of the Polish Treaty Practice

The aim of this paper is to analyze an exemption addressed to visiting teachers and researchers included in Art. 21 of the Agreement between the Republic of Poland and the Federative Republic of Brazil for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance signed in New York on 20 September 2022. The Brazil-Poland provision is compared with its equivalents included in agreements concluded by Poland with other countries. Clauses limiting or extending the application of the exemption, present or missing in Art. 21 of the Brazil-Poland DTC, are discussed. The said provision is also assessed against content and/or quality criteria that such a special provision should fulfill.

An Analysis of the Principal Purpose Test Rule and the General Anti-Abuse Rules Contained in the Brazil-Poland Double Taxation Convention Signed in September 2022

The paper deals with the analysis of the legal aspects of the principal purpose test rule (PPT-Rule) and the general anti-abuse rules contained in the Brazil-Poland Double Tax Convention concluded on 20th September, 2022, in the light of Brazil’s international tax treaty policy and practice. The Authors discuss issues related to the interaction between the PPT-Rule and other treaty specific anti-tax avoidance provisions as well as the objective and subjective elements of the PPT-Rule itself and the possible consequences of its application, especially challenges related to the legal certainty principle.

The Brazil-Poland Double Tax Convention in the Context of the Countries’ Contemporary Tax Treaty Policy and Practice

This paper deals with the Brazil-Poland double tax convention for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance, signed on 20th September, 2022, in the context of contemporary Brazil’s and Poland’s tax treaty policy and practice. The Author analyses its main features in comparison to Brazil’s and Poland’s positions to the MLI and changes introduced to the OECD and UN Models in 2017. Tax treaty provisions relevant to both countries’ tax treaty policies and practices are also examined. The study concentrates around the research question whether the BR-PL DTC fits into the countries’ contemporary tax treaty policy and practice or whether it is a unique bilateral tax treaty with specific features creating a sui generis pattern for tax treaties: for Brazil – with other OECD Member States and for Poland – with other South American states.

A conceptual model for standardized taxation of SMES in Nigeria: Addressing multiple taxation

Nigeria's small and medium-sized enterprises (SMEs) face significant challenges due to the complex and fragmented taxation system, which often results in multiple taxation and administrative burdens. This paper presents a conceptual model for standardized taxation aimed at addressing these issues and fostering a more efficient tax environment for SMEs. The proposed model seeks to streamline tax policies, reduce the incidence of multiple taxation, and enhance compliance through a unified framework. The model emphasizes the need for harmonizing tax regulations across federal, state, and local levels to eliminate inconsistencies and overlapping tax obligations. By implementing clear and consistent tax guidelines, the model aims to simplify the tax compliance process for SMEs and reduce the risk of double taxation. Additionally, the model proposes the introduction of a centralized digital platform to manage tax filings, payments, and documentation, which will improve efficiency and transparency in the taxation process. A critical component of the model is the establishment of standardized tax incentives and reliefs tailored to the needs of SMEs. These incentives are designed to encourage growth and investment while mitigating the negative impacts of excessive taxation. Furthermore, the model advocates for regular stakeholder engagement, including consultations with SMEs, tax authorities, and policymakers, to ensure that the tax policies are practical and effective. The expected outcomes of implementing this standardized taxation model include improved tax compliance, reduced administrative costs for SMEs, and a more transparent and predictable tax environment. By addressing the issues of multiple taxation and providing targeted support, the model aims to enhance the overall business climate for SMEs in Nigeria, contributing to economic growth and development.

A Discussion on the International Tax Issues Arising in Chinese Enterprises’ Investments to Brazil

Brazil is a member state of the Golden BRICS and the biggest economy in South America. China is also a member state of the Golden BRICS and the second biggest economy in the world. To enhance mutual economic cooperation in trading and investment is in line with the interests of both countries. Against this background, this paper discusses a few tax issues arising in the cases concerning Chinese enterprises’ investments in Brazil from the perspective of double tax treaty and the protocol signed in 2022. Due to the differences in double tax treaties and domestic tax systems, for Chinese investors, to invest in the European Union Member States such as Poland and to invest in Brazil will translate into different tax issues. The differences in tax issues would lead to different tax plans. Most of the tax practitioners in China could not speak Portuguese. This is a realistic obstacle preventing Chinese tax experts or Chinese enterprises from managing the tax risks arising in the Brazilian market. Macau as an area once having so close link with Portugal and nowadays still having some residents able to speak Portugal hopefully might build up a bridge between China and Brazil, if Macau has a plan to sign a double tax treaty with Brazil that is attractive to Chinese enterprises, and also if it has a competitive domestic tax regime.

Legal mechanism of avoiding double taxation in the European Union

The article titled “Legal Mechanism of Avoiding Double Taxation in the European Union” provides a comprehensive examination of the intricate legal framework established within the European Union (EU) to tackle the pervasive issue of double taxation.
 The contemporary landscape of the European Union is characterized by a dynamic and interconnected economic environment, fostering a thriving cross-border business ecosystem. However, this vitality often encounters significant impediments in the form of double taxation, where individuals or entities are subject to taxation in multiple EU member states for the same income or transaction. Double taxation not only creates administrative burdens but also undermines the seamless operation of the EU’s internal market.
 The article provides a comprehensive understanding of double taxation, delineating its various forms. It highlights the potential consequences of double taxation on businesses and individuals, such as reduced competitiveness, disincentives for foreign investment, and impediments to economic growth within the EU etc.
 Against this backdrop, the article delves into the central theme of the legal mechanisms implemented by the European Union to combat double taxation. It recognizes that while taxation is primarily within the purview of individual member states, the EU has intervened with a series of directives, treaties, and judicial rulings to harmonize and streamline tax practices.
 The article “Legal Mechanism of Avoiding Double Taxation in the European Union” explores the complex and crucial issue of double taxation within the EU. It delves into the various legal instruments, directives, and tax treaties that have been established to prevent or mitigate double taxation, which can arise when individuals or businesses are subject to taxation in multiple EU member states. The article provides insights into key EU directives, bilateral tax treaties, European Court of Justice practice etc.

Digital Services Tax: Comparative Analysis of Individual OECD Countries and Potential Risks of Introducing a Digital Tax in Russia

The need to ensure compliance with the fiscal interests of the state requires thetransformation of essential approaches to the regulatory regulation of tax relationsin the context of the regulation of the tax base taxed in Russia. At the same time,the problems that arise when taxing the activities of digital companies abroad arerelevant for Russia. The relevance of the study is due to the fact that digitalizationhas allowed companies to access a large number of customers around the worldwithout a physical presence in the countries where these customers are located.Thus, there is a discrepancy between the level of physical and economic presencein the market country. Currently, international tax coordination can no longer beidentified only with traditional double tax treaties. In the absence of consensus,many jurisdictions have begun to formulate unilateral rules for taxation of thedigital economy. Inconsistency of these rules is likely to increase the tax burden ofa number of multinational corporations, given that each state seeks to protect itsinterests. The author discusses national digital taxes introduced in OECD countries.It is proposed to divide these taxes into three groups: income taxes, consumptiontaxes (VAT for electronic services) and hybrid taxes. Based on a comparative legalanalysis of the legislation of the states in which digital taxes have been introduced,possible scenarios for tax regulation in Russia been developed. It is concluded thatthe introduction of a digital tax in Russia is not appropriate. In addition, in the contextof the introduction of various benefits for IT companies increasing the tax burden inthe field through the introduction of a new tax does not seem logical.

The Tax Cooperation Mechanism between China and African Countries and the Avoidance of a Double Taxation Agreement

The tax cooperation mechanism between China and African countries has a bearing on the business environment of bilateral economic and trade cooperation. At present, the tax cooperation mechanism between China and African countries has developed rapidly by way of the Forum on China-Africa Cooperation (FOCAC) and the Belt and Road Initiative (B&R), but it still faces challenges, such as an insufficiency in tax agreements, differences on the agreement content, a lack of trans-regional tax cooperation agreements and support mechanisms to promote tax cooperation and exchange. To improve the China-Africa international business environment, it is necessary to enhance the tax cooperation mechanism between China and African countries, including the speeding up and signing of tax treaties, coordinating and improving the content of the agreements, negotiating a convention of trans-regional tax cooperation, setting up a tax supporting cooperation dialogue mechanism, strengthening the construction of tax capacity and improving the tax dispute settlement mechanism.

Modernization and Digitalization of the EU Withholding Tax Procedure: Opportunities Offered by the FASTER Initiative

The EU’s Faster and Safer Relief of Excess Withholding Taxes (FASTER) initiative aims to modernize and digitalize the withholding tax procedure. It addresses two key issues: preventing tax abuse and double taxation for cross-border investors. Cum/Ex and Cum/ Cum scandals exposed vulnerabilities in the current system, leading to substantial tax losses. To streamline the process, FASTER introduces a uniform EU Digital Tax Residence Certificate (eTRC), enabling digital reimbursement applications. It also offers two fast-track procedures, ‘relief at source’ and ‘quick refund’, alongside standard reporting obligations for certified financial intermediaries to enhance transparency. While the initiative promises annual savings of EUR 5.17 billion for investors, it places a significant burden on financial intermediaries. Implementing eTRCs and meeting reporting requirements involve substantial costs. Concerns regarding data protection and implementation timelines exist. The proposal is currently under public consultation until 21 August 2023, and the implementation is targeted for 1 January 2027, subject to further developments and consultations. In summary, FASTER seeks to modernize the withholding tax process to combat abuse and facilitate cross-border investments, but its impact on financial intermediaries and data protection considerations remain noteworthy. FASTER, Withholding tax, Digitalization, Tax fraud, Double taxation, eTRC, data protection, reporting obligation, national register, cum/ex

Вопросы методологии использования и применения международных налоговых договоров (часть 2)

In this article the author intends to develop and justify the uniform approach to utilisation and application of the provisions of the conventions on avoidance of double taxation which specify the regime of taxation of particular types of income and capital (property). Stemming from the factors giving rise to double (multiple) taxation, the author examines the mechanisms of elimination of double taxation contained therein and the legal technicalities employed to lay down such mechanisms in the tax treaties. Furthermore, the author elaborates on his vision regarding the possible commonly shared algorithm that could eliminate or minimise the errors in utilisation and application of the distributive rules of the double taxation treaties taking into account peculiarities of terminology and wording of the treaties as well as the systematic approach of treaty drafters to the formulation of distributive rules (rules establishing the specifics of the tax treatment of certain types of income and capital) contained therein.

ANTI-HYBRID MISMATCH PROVISIONS OF THE FOREIGN TAX LEGISLATIONS AND THEIR COMPLIANCE WITH THE TAX CERTAINTY PRINCIPLE

Hybrid mismatch arrangements are means of structuring cross-border transactions which result into double taxation or double nontaxation due to differences in the legal qualification of the taxpayer’s status or the legal qualification of the type of income. Hybrid mismatches arise due to imperfection of legislative techniques and are often accidental, but in some cases hybrid mismatch arrangements act as a way of committing tax offenses, leading to base erosion and profit shifting. The key provisions against the intentional use of hybrid mechanisms aimed at tax avoidance are being specified at the level of national legislations. One of the problems arising out of such norms’ adoption is concluded in providing them with compliance to tax certainty principle, which acts as a guarantee of tax legislation application in accordance with the content of public interest laid down into them, and as the means of protecting the taxpayers’ reasonable expectations at the stage of law enforcement. This article analyzes the existing antihybrid mismatch provisions of the certain foreign tax legislations (on the examples of the United States of America, of the United Kingdom and of the members of the European Union) for their compliance with the tax certainty principle.

METHODOLOGICAL TOOLS FOR MAKING MANAGEMENT DECISIONS ON TRANSFER PRICING

The article systematises methodological tools for making managerial decisions on transfer pricing. An analysis of domestic scientific works on the study of the list of methodological tools for determining transfer prices is carried out. It is found that transfer pricing researchers in the system of management accounting agree on a list of methods for determining transfer prices, including methods for determining transfer prices on the basis of market prices, on the basis of cost prices determined by marginal/standard/full costs or on a double basis, and on the basis of contract prices. Researchers of transfer pricing in the tax system are united in this approach and work with the methods (comparable uncontrolled price (as sales); resale price; "cost plus"; net profit; profit distribution) recommended by the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and established by the Tax Code of Ukraine when checking the conformity of the terms of controlled transactions with the arm's length principle. Identify the conditions under which transfer pricing methods are used in domestic practice. The advantages and disadvantages of using certain transfer pricing methods are identified. To test and thoroughly analyse the transfer pricing methods, business operations of an agro-industrial enterprise are developed. The characteristics and limitations of the application of a particular transfer pricing method are identified. These transactions clearly illustrate the characteristics, advantages and disadvantages of using each transfer pricing method to verify the arm's length transfer price. The author demonstrates the need for adjustments in cases where the transfer price or profitability of a controlled transaction is not in line with the arm's length principle. The article emphasises the need for proportional adjustment of the tax base as a means of avoiding double taxation. Taking into account the systematisation of legal and regulatory provisions on transfer pricing, peculiarities, advantages and disadvantages of using certain methods, the author proposes a general scheme for making managerial decisions in the field of methodological management of transfer pricing operations.

Вопросы методологии использования и применения международных налоговых договоров (часть 1)

In this article the author intends to develop and justify the uniform approach to utilisation and application of the provisions of the conventions on avoidance of double taxation which specify the regime of taxation of particular types of income and capital (property). Stemming from the factors giving rise to double (multiple) taxation, the author examines the mechanisms of elimination of double taxation contained therein and the legal technicalities employed to lay down such mechanisms in the tax treaties. Furthermore, the author elaborates on his vision regarding the possible commonly shared algorithm that could eliminate or minimise the errors in utilisation and application of the distributive rules of the double taxation treaties taking into account peculiarities of terminology and wording of the treaties as well as the systematic approach of treaty drafters to the formulation of distributive rules (rules establishing the specifics of the tax treatment of certain types of income and capital) contained therein.

Об условиях применения льгот по российским соглашениям об избежании двойного налогообложения

The article focuses on rules regulating who is entitled to treaty benefits under Russian tax treaties. Tax treaty benefits cover all mechanisms of elimination of double taxation, guaranties and mechanisms of protection of taxpayer’s rights available under a double tax treaty. Entitlement to tax treaty benefits may be studied widely – as covering all rules of double tax treaties and national legislation on applicability of a certain benefit, and in a more narrow way – as covering just applicable anti-avoidance rules. The focus is on analysing the rules specifically aimed at discouraging abuse of benefits – the principle purpose test and the simplified benefit limitation provision. The principle purpose test is considered in more detail as a general anti-avoidance rule for applying tax treaty benefits.