Highlights of the International Fiscal Association (IFA) 74th Congress – Berlin, Germany

Group Approach and Separate Entity Approach in Domestic and International Tax Law

Corporate income tax systems are rooted in separate entity principle when attributing profits amongst the group entities, therefore a transaction approach would be adopted.  The Separate entity principle is the globally recognised standard of corporate taxation. Starting from the profit allocation in international tax law, based on the dealing of arm’s length principle. During the panel discussion, the panel examined how far this separate entity principle has eroded and why.

Groups of companies operating in the same business sector can choose different operating models and pursue different strategies that affect their relative performance, nuances which can get lose when it comes to tax policy.

The Linking of Tax Systems: dependence of domestic taxation on foreign tax treatment

In the international arena, the interaction of different tax systems may create uncertainty as well as opportunity for tax avoidance and tax evasion. As a starting point, most international tax legislators abide by the Single Taxation Principle i.e. income from cross- border transactions should be subject to tax once, no more and no less. Moreover, legislators and governments seek to prevent both double taxation and double non-taxation.

Since the beginnings of international tax law, the credit method has taken foreign taxation into account to avoid double taxation. For more than 20 years, qualification of conflicts should be resolved by binding the residence state to the source state’s domestic understanding of a term. However, it is only recently that the linking of tax systems has taken on central importance in the context of the BEPS project, especially through the introduction of linking and subject to tax rules.

Tax Directors – Corporate Officers’ duties to tax planning vs tax morality and compliance

The panel discussed the legal duties, moral tax duties, legality, legitimacy and reputation when carrying out tax planning and optimisation. Tax compliance is part of corporate governance to which directors have a duty towards. To which extent is tax planning legal and legitimate? Are tax offerings by other countries acceptable and when are they considered inacceptable? The panel also discussed the updated OECD/G20 Principles of Corporate Governance in 2023 on Tax Morale and building trust between tax administrators and large businesses.

Big Data and Tax – Domestic and International Taxation of Data Driven Business

“Big Data” i.e. projects, software, services or business functions that involve collecting, aggregating, structuring and analysing large information sets, in particular the application of data analytics and artificial intelligence, has given rise to multiple business models permeating the global economy. The panel provided an introduction to the main legal and fiscal features of Big Data and discusses business models and their treatment in domestic tax law, tax treaties and the law governing indirect taxation.

Carbon Climate Change Taxation

The Panel discussed how the Paris Agreement goals, can translate into fiscal and tax obligation in a mid-to-long term scenario. The panel discussed:

• What it means to price carbon
• The constitutive elements of a carbon price
• How Border Carbon Adjustment (BCAs) mechanisms relate to domestic application of a carbon price
• What types of plurilateral and multilateral approaches have been suggested to obtain a coordinate approach to the pricing of carbon.

Tax Treatment of Crypto Assets

Despite the increasing prevalence of crypto assets many tax policymakers and administrators are still at an early stage when it comes to addressing their tax implications.

With crypto assets being a new phenomenon, lawmakers can follow different approaches to the tax consequences across the various stages of their lifecycle. New concepts like blockchain also need to be understood and added when considering the issues involved.

The panel explored and discusses the tax challenges regarding the tax treatment of crypto assets and considered some of the developing responses from around the world.

IFA/OECD and Recent Developments in International Taxation.

The panel discusses the major developments in the International Tax Arena, with an update from Mr. Pascal Saint-Amans, former director of the Centre for Tax Policy and Administration at the OECD. The panel focuses on Pillar One and Pillar Two proposals, their status, implementation and timelines, policy considerations and critical analysis.

Furthermore, the seminar also brought the latest and most important issues that impact international taxation around the world. The main focus of this seminar was the recent judicial decisions on key international tax topics such as tax treaties, transfer pricing and domestic tax rules with cross-border implications.

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