Tax Rules Research Articles

ОСОБЛИВОСТІ ОПОДАТКУВАННЯ КРИПТОВАЛЮТИ В РІЗНИХ КРАЇНАХ СВІТУ

Every year, cryptocurrency is slowly but surely conquering the whole world. Thanks to this trend, its acceptance is increasing, and more and more options for its application are appearing. Large global companies are showing interest in blockchain and cryptocurrency, investing in them. It is quite obvious that these events will contribute to the rapid expansion of the market. Crypto assets continue to gain popularity and their adoption has become something more important and real. The number of stores accepting cryptocurrency as a payment method is increasing, crypto assets are being used as a form of fundraising, and you can even travel the world with cryptocurrency. In addition, the expansion of the use of cryptocurrency in world markets is explained by the rapidly growing interest in it on the part of the population of various countries of the world in the desire to earn or at least protect their income from the devaluation of national currencies. A direct analysis of the current rules of cryptocurrency taxation in foreign countries showed the existence of a number of differences in the implementation of tax regulation of transactions with cryptocurrency, because different approaches to the definition of cryptocurrency in foreign countries cause different methods of its taxation. That is, the fiscal policy regarding taxes on cryptocurrency in the countries of the world depends on how their legislation interprets the concept of virtual money: in the USA it is property, in Britain it is a capital asset, Italy considers it as a foreign currency. In Malta, El Salvador, Malaysia and Singapore, cryptocurrency taxation is absent or can be avoided if certain conditions are met. The global cryptocurrency market is at the stage of formation, therefore the regulatory and legal framework in various countries of the world is actively developing, adapting to the rapidly changing reality. Gradually, the cryptocurrency receives a final determination of its status with the further development of effective mechanisms of tax administration to ensure transparency and fairness of taxation, that is, the creation of tax legislation in this area.

The Metaverse: Problem of Adapting Tax and Legal Structures

The article is devoted to the analysis of theoretical and legal aspects of income taxation and transactions in the metaverse. The scientific interest of the author is connected with the problems of adapting tax and legal structures to economic relations, which are generated by unique technologies of the virtual world. Purpose: to reveal the legal nature of the metaverse economy for tax purposes; to identify the most common problems associated with the application of tax legislation. Methods: the study is based on the methods of comparison, analysis, synthesis, generalization, and formal-logical method. Results: analysis of the bases and principles of taxation of income and transactions in the metaverse (income tax, value added tax), analysis of the tax consequences of specific situations, formulation of basic principles of taxation. Conclusions: the conducted scientific analysis confirms that national regulators and tax authorities are only at the stage of understanding the problems that arise in the metaverse, including issues related to determining the moment of income, evaluating transactions for the exchange of virtual goods for virtual or fiat currencies. The author comes to the conclusion that the technical impossibility of flawlessly accurate calculation of the tax base and determination of the source of income in a space of which anonymity is an integral component should not serve as a basis for non-taxation. The solution to the problem of creating tax and legal structures focused on the metaverse consists in taking into account the specifics of legal situations (a hybrid approach), using presumptive taxation in segments of high risk of losses for the national tax base, introducing a special regime for cases when income is received outside of entrepreneurial activity, is insignificant, and is of a one-time nature. The article points out the need for tax rules to comply with the basic principles of legislation on taxes and the inadmissibility of excessive tax burden.

ВПЛИВ ПОДАТКОВОГО ЛАНДШАФТУ КРАЇНИ НА ПОДАТКОВЕ ПЛАНУВАННЯ ТНК В УМОВАХ ПРОЄКТУ BEPS

The article notes that in the context of globalization, multinational corporations exert an increasing influence on the economies of their home countries, host countries, and the overall state of international economic relations. The authors underline that tax planning is one of the TNC activities that grabs attention of the global public in terms of both its favorable and unfavorable effects. The article offers its own definition of the term «tax landscape», in which, unlike the existing ones, vertical, horizontal and temporal aspects are distinguished. The vertical aspect is presented as a synthesis of the supranational level of taxation and the national one; horizontal, as a system of tax rules and laws within a separate state; temporal, as a change in the main elements of taxation over time. It has been proven that at the current stage of formation of tax landscapes to characterize the supranational level, it is necessary to take into account the elements of taxation defined as part of the implementation of the international BEPS project: the global minimum tax, tax rates for surplus profits, and surplus profits as an object of taxation. The authors have been able to divide the studied countries into three groups depending on the level of direct taxation: high (United States, Canada and Australia), moderate (Great Britain, France, Italy, India, Germany and Switzerland), and low (China and Saudi Arabia). The first group (the United States) and the second group (the United Kingdom, Germany, France, Switzerland, and Italy) have been found to have the greatest tax losses as a result of «tax havens.» The level of direct taxation (profit and capital) in the countries of registration and countries of digital presence, the volatility of tax legislation, and compliance with the conditions of tax justice have been proposed as factors of the tax landscape to be taken into account by transnational corporations when developing tax planning strategies.

Tax In History: CFCs and Tax Treaties: Historical Elements for the IIR Debate

This article revisits the OECD Commentary’s position on the compatibility of CFC rules and tax treaties from a historical perspective. It highlights that the key (technical) argument behind the compatibility endorsed by the Commentary rests on the anti-abuse character of the rule. This backdrop is of relevance for the analysis of rules that purport to have a similar mechanism but that lack the anti-abuse character – including worldwide income taxation rules and the Income Inclusion Rule (IIR) under Pillar 2. The article posits that these situations are beyond the scope of the ‘technical argument’ and, therefore, cannot rely on the OECD Commentary to support their compatibility with tax treaties. Controlled foreign corporation rules, tax treaties, income inclusion rule, worldwide taxation

Options for multilateral solutions to international taxation issues and their assessment from the perspective of the tax security of the state

The article was prepared as part of a study aimed at identifying fundamental theoretical approaches to the legal provision of the fiscal interests of the state in the context of the transformation of tax relations and tax law institutions under the influence of the digital transformation of the economy and developing recommendations for creating an effective model of legal regulation of taxation in Russia as a means of ensuring the tax security of the state, which is affected by new challenges. From the point of view of the tax security of the state, the need to ensure compliance with the fiscal interests of the state requires the transformation of essential approaches to regulating tax relations. Given that the Russian economy has faced new challenges in recent years, it seems advisable to explore not only the challenges themselves, but also ways to respond to them. It is noted that the Russian economy is successfully coping with new challenges and, in this regard, it seems relevant to return to the tasks that the state faces from the point of view of both national and international taxation. The article analyzes the projects of the OECD and the United Nations on reforming the taxation rules of international groups of companies. The projects of international organizations are considered as answers to the challenges of tax evasion, as well as to the challenges of the digital economy. The study focuses on the UN initiative to prepare a framework convention on international tax cooperation. The UN initiative is considered from the point of view of taking into account the interests of developing countries. The article also assesses the need to amend Russian tax legislation in the context of new challenges to the tax security of the state. It is noted that the current system of preferential tax regimes, which continues to be improved, meets the interests of Russian taxpayers and the national tax base.

GLOBAL EXPERIENCE IN CRYPTOCURRENCY TAXATION

Abstract. The article is devoted to the analysis of global experience in the taxation of cryptocurrencies and the development of effective tax administration mechanisms. The object of the research is the taxation mechanism of the countries of the world that have legalized cryptocurrency. The purpose of the work is to study and analyze the global experience of cryptocurrency taxation and the possibility of introducing effective tax administration mechanisms in Ukraine. The research method is a theoretical and analytical substantiation of the functioning of the cryptocurrency market in certain countries and their taxation mechanisms. The need to develop efficient and effective tax administration mechanisms and ensure the stability of tax legislation is an objective prerequisite for ensuring the transparency and fairness of taxation of cryptocurrencies. The scientific article examines the peculiarities of the global experience of taxation of cryptocurrencies, which play a significant role in the processes of international movement of capital, forming relevant financial flows, and contributing to the capitalization of resources. The issues of taxation of cryptocurrencies are relevant on the path of the country's integration into the world community, insufficiently considered in modern conditions and requiring in-depth research and improvement. In the course of the study, the experience of cryptocurrency taxation in certain countries was summarized and the opportunities opened up due to the introduction of various cryptocurrency taxation tools were highlighted. The issue of developing effective tax administration mechanisms in order to ensure the effectiveness of cryptocurrency taxation and the growth of budget revenues remains unresolved and relevant today. Conclusions – the development of effective tax administration mechanisms is an important task to ensure the transparency and fairness of cryptocurrency taxation. This may include the development of clear taxation rules, the creation of monitoring and reporting systems to track cryptocurrency transactions, as well as cooperation with international partners to address transitional aspects and harmonize tax policies. Keywords: cryptocurrency, taxation, financial market, cryptocurrency market, income tax, capital gains tax, mechanisms of tax administration.

Luxembourg tax updates

Abstract This article aims at providing a holistic overview of Luxembourg’s tax framework applicable for individuals. Specifically, this article is divided into four sections. In the ‘Overview of the tax framework for individuals’ section, an overview of the Luxembourg income tax rules for each category of income will be given, after having defined the tax residency concept under Luxembourg tax law. We will also cover in the ‘Overview of the tax framework for individuals’ section other indirect taxes, such as gift and inheritance taxes. In the ‘Impatriate tax regime’ section, we will address the conditions required to benefit from the specific tax regime for qualifying international employees that have been introduced into Luxembourg tax lax. The ‘Profit-sharing premium’ section will address the profit-sharing bonus mechanism for employees, introduced to enhance the country’s attractiveness. Finally, the specific tax regime for carried interest, which has been implemented by the Law of 12 July 2013 in Luxembourg, will be covered.

Semantic scope of Indus inscriptions comprising taxation, trade and craft licensing, commodity control and access control: archaeological and script-internal evidence

This article studies the semantic scope of the yet undeciphered Indus script inscriptions, which are mostly found on tiny seals, sealings, and tablets. Building on previous structural analyses, which reveal that Indus script was semasiographic and/or logographic in nature, this study analyses the combinatorial patterns of Indus script signs, and the geographical distribution of the inscriptions, to establish that the inscriptions did not encode any proper noun, such as anthroponyms, toponyms, or names of specific organizations. Analyzing various archaeological contexts of the inscribed objects—e.g., seals found concentrated near city gates (e.g., Harappa), craft workshops (e.g., Chanhu-daro), and public buildings (e.g., Mohenjo-daro), often along with standardized Indus weights that were used for taxation; sealings attached to various storage containers and locking systems of “warehouse” chambers as indicated by their reverse-side impressions (e.g., the sealings of Lothal “warehouse”); inscribed sealing-pendants of Kanmer, conjectured to be passports/gate-passes by archaeologists; and seals with identical inscriptions often found from distant settlements—this study claims that the inscribed stamp-seals were primarily used for enforcing certain rules involving taxation, trade/craft control, commodity control and access control. Considering typological and functional differences between the seals and tablets, and analyzing certain numerical and metrological notations (, , , ) typically found at the reverse sides of many two-sided tablets whose obverse sides contain seal-like inscriptions, this study argues that such tablets were possibly trade/craft/commodity-specific licenses issued to tax-collectors, traders, and artisans. These reverse-side tablet inscriptions possibly encoded certain standardized license fees for certain fixed license slabs, whereas their obverse-side inscriptions specified the commercial activities licensed to the tablet-bearers. These seals/tablets were possibly issued by certain guilds of merchants/artisans, and/or region-based rulers or governing bodies, who collaborated in the integration phase of IVC, to standardize certain taxation rules and trade/craft regulations across settlements. The seal/tablet iconographies might have been the emblems of the guilds, rulers, and/or governing bodies.

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.

Head Office Taxation Rules and Simplification of Compliance Costs of SMEs

This study performs a legal assessment of the proposed Directive on Head Office Taxation, and puts forward alternatives to overcome the identified concerns. It is structured around the building blocks of the proposal: (i) scope; (ii) access to the regime; (iii) substantive tax rules; and (iv) procedural tax rules. The study concludes with policy considerations on the proposed Directive’s impact on the strengthening of the European Union’s internal market.

Parliament

This overview highlights the Parliament’s adoption of (i) a resolution on further reform of corporate taxation rules; (ii) a report on EU treaties reform; (iii) a resolution on the role of tax policy in times of crisis; (iv) an opinion approving package for NextGeneration of own resources with few amendments; and discussion of (v) a draft report proposing amendments to FASTER.

Indian Budget 2022: A Make-or-Break Moment for Cryptocurrency

People are liable to the tax rate if they transfer digital assets during a specific fiscal year. There is no distinction between income from businesses and investments or between short-term and long-term gains because the 30% tax rate is applicable regardless of the sort of income. By clearly stating how it would be charged, the Indian budget 2022 has provided some direction. Losses were consequently experienced by both new and old cryptocurrency buyers. Under Section 115 BBH, it is illegal to offset cryptocurrency losses with cryptocurrency gains—or any other gains or revenue, for that matter. The implementation of the 30% tax rule on digital assets has caused the collapse of the cryptocurrency market, and there is a possibility that investors will continue to suffer losses in the future.

Taxation at a Distance

Wealthy Americans escape the income and estate taxes by holding assets at a legal remove. This general tax avoidance strategy—holding wealth “at a distance”—takes several forms, but the most powerful of all is the use of life insurance. Tax law has come to afford special treatment to life insurance due to some combination of reasoned policy, industry lobbying, and illogical application of existing tax rules and judicial anti-abuse doctrines. Courts have only recently begun to push back against taxpayers’ use of life insurance as a tax-free brokerage account, but the judicial crackdown is fatally flawed. This is because it rests on what I call “control doctrines,” or arguments that taxpayers should only become liable for paying taxes on their life insurance investments when they exercise direct, personal control over those investments. But I argue that taxpayers can benefit from such arrangements without exercising any control, and that economic benefit is a more appropriate basis for tax liability. I show that applying an economic benefit principle would produce simple, administrable rules superior to the control-based status quo in both the income tax and estate tax settings. My argument demonstrates that tax law must reject extreme legal formalism—such as the legal “distance” created through life insurance and trusts—in order to meet the challenge of high-wealth exceptionalism.

The Fiat Chrysler Finance Europe Case: One Step Forward Towards an Appropriate Application of the Ban on State Aid

The judgment of the Grand Chamber of the European Court of Justice of 8 November 2022 (joined Cases C-885/19 P and C-898/19 P) marks an important point in the Court’s jurisprudence on State Aid because the principle of legality in tax matters, the attribution of competencies to the European Union, and the application of State Aid are addressed in a coordinated way. The decision clarifies that the reference system, which is relied upon to measure the actual selectivity of a national measure, must be based exclusively on the statutory law applicable at the national level, according to the principle of legality. This is a first step towards an appropriate application of Article 107 TFEU, whose application had been stretched too much in the last years. The next steps should be the overruling of Gibraltar jurisprudence and the need to limit the ban on State Aid to national measures for which evidence of actual damage to free trade between the Member States is manifest. Ban of State Aid, Selectivity, Reference system, Legality principle, Attribution of competences, Tax rulings, Arm’s length principle, Transfer pricing, Tax sovereignty, Competition, Trade between Member States

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.

Rationality of the Tax System and Taxation Principles in the Context of Contemporary Fiscal Crisis (Analysis from the Perspective of the New Institutional Economics)

Abstract The paper presents, in the synthetic way, the issue of the rationality of the tax system and taxation principles in relation to the clearly visible fiscal crisis in the 21st century caused by, among others, COVID-19 pandemic. The analysis which is theoretical (descriptive, comparative) was carried out by using tools indicated in the area of New Institutional Economics (NIE). Attention was devoted primarily to the importance of specific institutional arrangements, broadly understood as the “rules of the game” applicable in the political and economic spheres, and related to the problems of public finances. Research has shown that the appropriate design of tax rules may contribute, to some extent, to limiting the fiscal crisis. Tax policy, and even more broadly, fiscal policy, may determine the formula in which the economic achievements regarding compliance with tax principles and fiscal rules can be implemented. What is primarily important is the legal framework (one of the most important formal institutions) within which state policy in the field of public finances should be implemented.

Features of taxation of digital services in Ukraine and the EU: a comparative legal analysis

Introduction. This paper is devoted to a comparative legal analysis of digital services taxation systems in the European Union and Ukraine. In the modern conditions of the development of the e-commerce market, the question of revising the approaches to taxation of digital services is becoming more and more relevant. The purpose of the paper is to identify and compare the specifics of the legal problems of taxation of digital services and the mechanisms for solving them in the European Union and Ukraine. Results. The legal aspects and legal acts governing the taxation of digital services in both jurisdictions have been studied. Special attention is paid to the application of the concept of Digital Permanent Establishment (taxation based on digital presence), which is applied in the context of taxation of digital companies and their presence in countries where they do not have physical offices or branches. The authors highlighted the factors affecting the determination of the jurisdiction (country) for the provision of digital services: 1) the place of company registration; 2) physical presence; 3) location of the consumer; 4) value added tax rules and sales volume; 5) international agreements and tax treaties; 6) judicial practice; 7) rules of a specific industry. In the conclusions, the authors cite current trends and challenges related to digital taxation, and provide recommendations for the further development of these systems. Digital taxation is a topical issue for the EU and Ukraine. Both jurisdictions have implemented systems for taxing digital services through VAT. However, it is considered important to pay more attention to international coordination and improvement of tax regimes to support the development of the digital economy and entrepreneurship.

PUBLIC DECISIONS IN THE TAX LEGISLATION OF GEORGIA

Ekaterine Shainidze 
 E-mail: ekaterine.shainidze@bsu.edu.ge 
 Doctor of Finance, Associate Professor, Batumi Shota Rustaveli State University 
 Batumi, Georgia 
 https://orcid.org/0000-0002-3612-1790
 
 Abstract. According to the tax legislation of Georgia, informing taxpayers is one of the important elements in the tax administration system. On January 1, 2011, with the implementation of the new tax code in Georgia, a public decision was defined as one of the sources of providing information to the taxpayer. It is a decision on the norm of application of the tax legislation, which is issued by the Minister of Finance of Georgia based on the decision of the dispute review body or based on the analysis of the existing practice of taxation of taxpayers by the tax body. A public decision has binding legal force, therefore, regulatory and law enforcement authorities are not authorized to charge a person additional fees and/or sanctions if he acts in accordance with a public decision.
 The introduction of the public decision mechanism into the tax legislation of Georgia was supposed to be a measure to facilitate the timely fulfillment of tax obligations by taxpayers, however, until now only 7 such decisions have been adopted and published accordingly. In addition, the use of the mentioned lever for informing the payers did not happen until 2018.
 Published public decisions have regulated several issues of taxation, including: income from securities, forgiveness of loan obligations for individuals, operations related to crypto-assets, the right to use a leased asset, delivery of agricultural products produced in Georgia, the difference between the weight of goods at the port of unloading and the port of loading when importing grain, Rules of taxation of tourist services. It is important to note that the basis of public decision-making is the analysis of the existing practice, which determines the need to explain the tax norm more than it is conveyed by the tax code or subordinate normative acts.
 The annual reports of the Revenue Service do not reflect information about the effectiveness of using this important lever of tax administration - the mechanism of public decision. In addition, it is difficult to name arguments about the absence of the need to use this means of informing the payers more intensively.
 A significant part of tax disputes is partially satisfied complaints in favor of taxpayers, which indicates that there are many disputed legal norms in the tax legislation. In the conditions of a low tax culture in the country, insufficient protection of one of the fundamental rights of taxpayers - the right to receive information about the application of the tax legislation of Georgia - has a negative effect on the timely fulfillment of tax obligations. In the mentioned conditions, the active use of the public decision mechanism has an important role in ensuring the correct and unambiguous application of tax norms, both from the side of the payers and the tax authorities.

Tax rules on wealth imbalance and the investigation of money laundering in Peru

This study aims to evaluate the feasibility of using the tax methodology for determining unjustified increases in assets in money laundering cases heard in the courts. It also seeks to identify the errors made by the Tax Authority with the purpose of ascertaining whether these errors could hinder the successful application of the methodology in investigations of money laundering cases. In order to achieve these objectives, a mixed research methodology was conducted that included the analysis of rulings issued during the years 2020 and 2021 by the Peruvian Tax Court and sentences issued by the judiciary. This was complemented by semi-structured interviews with experts from the public sector, academia and accounting with relevant experience on the subject. The study found that there are some practical issues in the application of the methodology that can be overcome and that do not represent an insurmountable constraint. The study also found that the tax methodology allows for a more effective clarification of asset imbalances, and concludes that, once implementation errors have been overcome, the tax methodology can be feasibly employed to the benefit of money laundering investigations.

Greek special tax regimes for pensioners and HNWI – process – advantages – Greek inheritance and donations tax rules

Greek special tax regimes for pensioners and HNWI – process – advantages – Greek inheritance and donations tax rules