bluuebunny/crossref_metadata_2025_split huggingface dataset:
COVID-19 and Fiscal Policies: The Paycheck Protection Programme: A Tax Expenditure in Reverse?
Authors: Thuronyi Victor 
Published: February 2022

The Paycheck Protection Programme (PPP) enacted by the US Congress in March 2020 furnishes an example of a spending programme that could have been structured as a tax provision. If it had been enacted as a tax provision, the PPP would almost certainly have been drafted more tightly, in a way that could support a precise revenue estimate. The Internal Revenue Service might have administered the PPP more effectively and at a lower administrative cost than was involved in using private banks. The lack of public hearings before enactment contributed to poor design of the PPP.
Tax expenditures, technical corrections, legislation, public hearings, administrative costs.
International Tax Soft Law Instruments: The Futility of the Static v. Dynamic Interpretation Debate
Authors: Navarro Aitor 
Published: February 2022

The purpose of this contribution is to examine whether certain non-binding interpretation instruments, such as the OECD Commentaries, should have a privileged value over other equally non-binding texts in the context of the interpretation process of double tax conventions (DTCs). It will be shown that the OECD Commentaries should only be favoured over other interpretation materials exclusively on the grounds of the quality of its arguments as the opposite would entail to grant de facto a binding nature to this text, being that this outcome is unacceptable from the perspective of the very nature of this document and from a well-built interpretation theory applied to DTCs. This conclusion has far reaching implications yet, specifically in the context of the so-called static versus ambulatory discussion on the use of the OECD Commentaries, the approach adopted in this contribution entails that the predetermination that derives from the use of the most recent version of the Commentaries or the version that was available at the moment a DTC was being negotiated should be dismissed. Instead, the version of the Commentaries that should prevail is the one containing the most adequate interpretative outcome in accordance with the possible meanings of the terminology of the rule being interpreted, its context, and its purpose. Otherwise, the said predetermination only leads to a shortcut in the reasoning process that the interpreter must conduct, potentially leading to undesired arbitrariness.
Double Tax Conventions, legal interpretation, soft law, OECD Commentaries.
The Arm’s Length Principle Evolves Towards a ‘Value Creation Functional (i.e. DEMPE) Formula Standard’: A Barrier or a Gateway to Locational Business Planning?
Authors: Solange Screpante Mirna 
Published: February 2022

Value creation vis-à-vis the DEMPE rationale and methodology converted a conceptual notion associated with contributions to value creation but lacking prescription into a new standard to allocate profits to achieve reunification for tax purposes in a manner consistent with the directions of the arm’s length principle (ALP). Within this context, this article questions whether value creation could or should be based on a functional (i.e. DEMPE)-formula-based standard to allocate profits, and whether such an approach would target or abet tax avoidance framed by apparently genuine structures –‘accurately delineated’ (i.e. alignment of the allocation of profits with value-generating activities) that, in terms of how income is earned, might not be commercially rational. That said tax avoidance one that goes beyond the customary understanding and limitations of abuse under domestic law norms which paradoxically could make tax planning considered "abusive" easier to sustain within the BEPS precepts. Thus, the functional (i.e. DEMPE)-formula-based standard coupled with the commercial rationality test needs to be interpreted in a way that determines whether the performance of those functions by each party in a specific jurisdiction is rational from a commercial/business purpose perspective based on certain business parameters to provide taxpayers with a higher level of certainty, and in turn to devise suitable objective standards concerning the meaning of rationality in business operations for which typically there are open variuos legally sustainable ways to achieve the same economic outcomes.
Value creation, intangibles, Actions 8–10, transfer pricing, source, commercial rationality, substance, anti-avoidance, arm´s length principle, fractional.
Country Note: The Newly Revised Israel–Japan Double Taxation Convention: The MLI’S Impacts And Implications
Authors: Sherman Yehoshua , Weiss Zeev , Saito Reika 
Published: February 2022

The Israel–Japan DTC has now been amended in accordance with the mandates set forth by the OECD’s ‘Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting’ (MLI) as a consequence of the fact that both Israel and Japan are signatories to that agreement.
The revisions to this tax treaty have found expression in a number of contexts, each being potentially outcome determinative as to the profitability – and even the viability – of a commercial enterprise or transaction conducted between the two Contracting States.
Albeit the MLI revisions adopted in this treaty are common to many of the revised DTCs, the potential impact for Japanese and Israeli investors are particularly sensitive in light of the revisions introduced vis-à-vis the provisions of the previous treaty and upon which large scale business planning was carried out. Among the revisions with which the business community will have to contend are, inter alia, the mechanism for resolving dual corporate residence (previously the treaty had a place of incorporation test), the expanded scope of the permanent establishment threshold test and the introduction of the Principal Purposes Test (PPT) into a treaty which previously contained no broad anti-avoidance provision.
Israel, Japan, new MLI treaty, revised DTC, Israel MLI, Japan MLI, revised treaty.
Country Note: Transfer Pricing and Profit Shifting Practices in a Free Trade Zone: A Case in Batam, Indonesia, Based on a Tax Court Decision
Authors: Tambunan Maria R.U.D. , Sinaga Womsiter 
Published: February 2022

This study discusses how the offered tax incentives through the establishment of the Batam Free Trade Zone have been overexploited by Multinational Enterprises (MNE)s’ manufacturers to minimize their tax obligation. The close geographic location to Singapore, the hub of the world’s logistic shipping lane, provides easier access to these practices. The common profit shifting schemes found in the region are transfer pricing and rerouting transactions.
Concerning the transfer pricing practices based on the tax court decisions, it was determined that business entities have reported unreasonable business turnover with years of consecutive loss despite an increasing number of assets. The rerouting of transactions has specifically been performed by shipping businesses in order to optimize the benefit of not paying types of consumption taxes. They were able to exploit this benefit because the Indonesian Government granted VAT and import duty exemptions to sea transportation businesses for the supply of ships and ship’s spare parts. These businesses established shipyards in Batam, and the products were subsequently sold to affiliations in another country. Then, the user entity that is a member of the sea transportation business in Indonesia imported the same products from the country where a member of affiliation is located. To address these challenges, the Indonesian Government has made a measure to minimize tax leakages through persuasive enforcement and a systematic investigation that requires continuous monitoring.
Transfer pricing, profit shifting, free trade zone, tax avoidance
Case Law Note: Italian Supreme Court and the Parent-Subsidiary Directive: A Dark Tunnel with a Light at the End?
Authors: Persiani Alessio 
Published: February 2022

The article deals with the recent case law of the Italian Supreme Court in respect of the application of the Parent-Subsidiary Directive. In the timeframe between 2017 and 2019 the Supreme Court issued four judgments which denied the application of the dividend withholding tax exemption regime based on a restrictive and highly disputable interpretation of the ‘subject to tax’ requirement laid down under Article 2(a) (iii) of the Parent-Subsidiary Directive. The article analyses this interpretative approach and highlights the reasons of its non compliance with the principles underlying the Parent-Subsidiary Directive. Then the article analyses a further and more recent judgment of the Italian Supreme Court in which the Court seems to change its approach, clarifying that the dividend withholding tax exemption regime applies even in cases in which the parent company is merely liable to tax in its State of residence, being not required that the dividends received by the parent company are subject to tax in that State. In the conclusions the author expresses his view on possible amendments to the Parent-Subsidiary Directive which could contribute to a more straightforward application of the regimes provided by the Directive in the different EU Member States.
Parent-Subsidiary Directive, dividend, withholding tax, subject to tax requirement, liable to tax, Italian Supreme Court, case law, juridical double taxation, economic double taxation.
Accelerated Payment Notices and Follower Notices in the UK: An Affront to Justice?
Authors: Jacobsen Henning Magnus 
Published: February 2022

In 2013, Her Majesty’s Customs and Revenue (the HMRC) gained significant powers in tackling the issue of tax avoidance in the form of follower notices (FN) and accelerated payment notices (APN). This has had a significant impact on the taxpaying community. For instance, in the tax year 2016/2017 alone, the HMRC accumulated GBP 520m in additional revenue through these powers. Many practitioners and judges have voiced their criticism against the powers but have yet to provide a comprehensive account of the inadequacies of these notices. Their very nature is punitive, and they are overly broad for their intended target, specifically, aggressive tax planners. To make matters worse, taxpayers are left without effective judicial safeguards. This article seeks to explain that both notices are an affront to justice by focusing on these aspects. Moreover, this article aims to shed light on recent cases such as Haworth that demonstrate that the judiciary is prepared to show some resistance against these notices. While the case provides a glimmer of hope for taxpayers, this article argues that judicial intervention alone is not enough; parliamentary intervention is also needed.
UK tax law; Her Majesty’s Customs and Revenue; accelerated payment notices, follower notices; tax planning; tax administration; judicial review; rule of law.
Saving the ATAD CFC Regime Through Abuse of Law or the Rule of Reason
Authors: Nyström Wilhelm 
Published: February 2022

This article revisits the debate about the extent to which the controlled foreign company (CFC) rules in the Anti-Tax Avoidande Directive (ATAD) are compatible with the EU fundamental freedoms. It considers why the ATAD CFC rules may restrict those freedoms and whether that conflict may be resolved by recourse to the general principle of abuse of law, which may prevent a taxpayer from relying on a fundamental freedom and thus prevent the restriction from arising, or to the rule of reason, which may serve to justify the restriction. The paper considers whether these may be treated as separate doctrines and some implications of doing so.
The paper reaffirms that the ATAD CFC rules may be considered to be incompatible with the fundamental freedoms as interpreted in Cadbury Schweppes. Then, by reference to recent CJEU decisions, the paper interprets new standards of artificiality and reassesses the aforementioned incompatibility. Firstly, the now expanded anti-abuse principle may, in many instances, prevent the restriction from arising. Secondly, the now more generous rule of reason holds the restriction largely justified in relation to third states, and this should be extended also to intra-EU situations. Ultimately, the ATAD CFC regime is likely to be considered mostly compatible with the fundamental freedoms.
Direct tax, EU law, ATAD, CFC rules, Cadbury Schweppes, fundamental freedoms, rule of reason, abuse of law, overriding reason in the public interest, avoidance.
Poland’s Implementation of EU GAAR Compromises Constitutional and EU Principles
Authors: Kuzniacki Blazej 
Published: February 2022

One of the most potent legal instruments for preventing tax avoidance is Article 6 (general anti-avoidance rule, EU GAAR) of the Anti-Tax Avoidance Directive (ATAD). This article analyses Poland’s very restrictive implementation of EU GAAR to demonstrate that the implementation, although permissible under Article 3 ATAD, has led to the protection of the Polish tax base at the cost of constitutional and EU principles. The main purpose of this article is to reveal the incompatibility of the Polish GAAR with the constitutional and EU principles of legal certainty and proportionality and to draw consequences from it. Furthermore, the article aims to show that the EU should have taken a different approach to the EU standard for abuse of tax law.
GAAR, ATAD, tax avoidance, Poland, constitution, EU primary law, CJEU, proportionality, certainty, repressive.
Country Note: Portuguese Chartered Accountants’ Perceptions of SME Tax Compliance: The Role of Taxing Expenses
Authors: Dinis Ana , Martins António 
Published: February 2022

This study presents an empirical analysis related to the following research question: What is the Portuguese chartered accountants’ perception of the role of the autonomous taxation of expenses (ATE) in small and medium firms’ level of tax compliance, and especially when this perception is mediated by factors such as the size and the economic activity of firms?
The authors tested to determine if there are differences in the perceptions of accountants, and results show that the respondents’ application of ATE to micro and small companies has a positive impact on their perceptions of tax compliance. The same is not valid for medium-sized companies for which there is no significant effect on the perceptions of the role of ATE on small and medium enterprises (SME) tax compliance.
Tax compliance, autonomous taxation of expenses, chartered accountants, small firms, Portugal.
Country Note: The Gulf Cooperation Council (GCC) States: New Players in the International Tax Competition Game
Authors: Alsultan Sarah Khaled 
Published: February 2022

International tax competition is a worldwide phenomenon that is intensified by globalization which is a process that eased the movement of highly mobile businesses. This work argues that, unlike the rest of the world where tax competition has existed since the 1980s, the Gulf Cooperation Council (GCC) states’ efforts to lure non-GCC entities to conduct business in the GCC’s oil-rich states (Kuwait, Bahrain, Kingdom of Saudi Arabia, Qatar, United Arab Emirates, and Oman) have been emerging since 2000. In particular, this work examines the unprecedented shift in tax policies to halve the rates and introduce tax incentives in the GCC region.
This work attempts to investigate three questions: (1) Has tax competition recently emerged in the GCC? (2) If so, who are GCC States trying to compete with? (3) What is and should be the GCC organization’s role in competition? To the best of this author’s knowledge, no literature has investigated these questions. This work is timely because GCC states have announced their official plans to further reduce corporate income tax (CIT) rates and offer more tax incentives in the near future. These are plans that ignore the ongoing global changes in tax policies that impair the success of these reforms. The findings of this work provide the foundation for future studies to debate whether tax competition in the GCC region is harmful and, if so, how to address it.
Tax competition, Gulf Cooperation Council, GCC, tax incentives, tax rate.
Married, Unmarried Cohabitants, (Multiple) Parents and (Step) Children in Tax Law in the Netherlands and Europe
Authors: Gubbels N.C.G. 
Published: February 2022

Society has changed considerably over the past fifty years. Whereas before, most people got married, had several children during the marriage and divorce was still relatively rare, currently, there is much more diversity with different forms of cohabitation. Although this trend is present throughout Europe, there is a large difference in the pace and manner in which the new patterns of society are manifesting themselves there. This article indicates that the same applies to the fiscal recognition of unmarried cohabitants and stepchildren from a married couple and an unmarried couple (‘informal’ stepchildren).
In the Netherlands, married and unmarried couples are now treated entirely the same for income, gift, and inheritance tax purposes. This also applies to formal and informal stepchildren. In a European context, the Netherlands is therefore leading the way in recognizing nontraditional cohabitation variants in tax legislation. With this article, the author not only discusses the tax treatment in various European countries but also the possible arguments for (not) equating them.
The author hopes to contribute to the discussion of whether extra-marital cohabitation and other related relationships should be treated in the same way for tax purposes as relationships that arise through marriage.
Income tax, inheritance tax, gift tax, marriage, extra-marital cohabitation, stepchild, informal stepchild, multiple parenthood, equality principle, tax partner.
Day 1 of the Spanish Digital Services Tax: And Now What? A Wave of Tax Policy, Legal Interpretation and Compliance Challenges
Authors: Escribano Eva 
Published: February 2022

The Spanish Digital Services Tax came into force on 16 January 2021 after a long and turbulent journey with the ambition to serve as an interim measure pending the long-awaited multilateral solution. This article aims to critically analyse the main features of the tax and further reveal and assess the primary challenges that its implementation and day-to-day management are likely to prompt, specifically: the vague delimitation of some of its provisions with the subsequent damage to legal certainty, the (almost) unfeasible access to the data required to calculate the relevant taxable revenues that render the tax ultimately unworkable, and the tax planning opportunities that may be exploited by taxpayers to minimize their tax liabilities, inter alia.
Finally, the doubtful consistency between the design of the tax and the alleged tax policy guideline behind it (i.e., the ‘value creation’ principle) is assessed. Ultimately, the question remains of whether this path is genuinely worth exploring. Are we really willing to endanger fundamental principles of the rule of law for a temporary patch targeting a few multinationals?
Digital services tax, digital economy, value creation, user data, social media, online advertising, sharing economy
Comparability Adjustments in Transfer Pricing and the Need for a Digital Data Intensity Adjustment
Authors: Jalan Nupur , Misquith Elvira 
Published: February 2022

A comparability analysis forms the core of transfer pricing and involves the analysis of controlled transactions and the search for the right comparable. However, difficulties often arise in exactly matching the identified comparable to the controlled transaction. Hence, various comparability adjustments (such as the accounting, balance sheet, etc.) are undertaken primarily to eliminate differences and to achieve greater comparability between the comparable transactions/companies selected and the controlled transactions/companies under analysis.
It is pertinent to mention that many of the commonly used adjustments cannot entirely take care of all of the functional and economic variations pre-existing between the comparable and the controlled transactions (one such problem area is the functional variation that occurs due to rapid digital and technological advancements and changes). The authors, therefore, believe there is a need to devise and implement a change (i.e., digital data intensity adjustment that could account for the differences between comparable companies due to these digital/data developments.
In the context of the above background, the paper summarizes some of the existing comparability adjustments; thereafter, it highlights the need for a new adjustment to keep pace with the growth of the digital/data economy along with a case study. Further, certain broad frameworks for this new adjustment are discussed.
Digital services tax, digital economy, value creation, user data, social media, online advertising, sharing economy
Taxation in Democratic Czechoslovakia and the Independent Czech Republic
Authors: Radvan Michal 
Published: February 2022

The taxation system in communist Czechoslovakia was based on the redistributive, regulative, and fiscal functions of taxes. After the Velvet Revolution in November 1989, it was crucial for the economy and economic development to change the tax system. To achieve this, new politicians decided for the slower transformation of Czechoslovakian tax law. Most of the tax acts that were valid in socialist Czechoslovakia remained in force after the Velvet Revolution; however, they were amended in 1990 with regard to the aim of the tax reform being prepared for 1993.
In August 1992, the decision to split Czechoslovakia was announced. It was more of a historical coincidence that the independent Czech Republic’s foundation in 1993 was connected with complex tax reform. The reform’s primary aims were the link between tax revenues and gross domestic product; tax justice and fair competition; possible foreign investments and general openness to the European and international markets; elasticity and effectiveness of the tax system; and reduction of social criteria in taxation.
The tax reform of 1993 in the Czech Republic is one of the most complex tax reforms globally. Most of the acts adopted at the end of 1992 are still effective. This article aims to introduce the developments in terms of taxation in democratic Czechoslovakia and the independent Czech Republic to international readers.
Tax system, tax reform, Czechoslovakia, Czech Republic, Velvet Revolution, nullum tributum sine lege, income tax, property tax, VAT.
The Influence of the BEPS Multilateral Instrument on Tax Treaties Concluded by Non-signatory Countries
Authors: Eduardo Schoueri Luís , Tomazela Ramon 
Published: February 2022

This article intends to assess the impact of the Base Erosion and Profit Shifting Project (BEPS) Multilateral Instrument (MLI) on tax treaties concluded by non-signatory jurisdictions. To achieve this goal, the authors initiated the analysis with forty-four countries that are members the BEPS Inclusive Framework but have not yet signed the MLI. Out of these forty-four countries, the authors focused on those that had tax treaties signed or amended after 2017 which has narrowed down the scope to the following countries: Angola, Botswana, Brazil, Cape Verde, Congo, Maldives, Thailand, and Vietnam. In this context, the article examines the tax treaty-related BEPS measures that were adopted by these countries in their bilateral tax treaties, addressing the merits and potential consequences of the choices made by non-signatory jurisdictions. Based on the findings of the research, the article concludes that the impact of the MLI varies significantly depending on the tax treaty policy of each country and that, thus far, it has been limited primarily to the minimum standards on dispute resolution.
Multilateral instrument, non-signatory countries, tax treaty policy, minimum standard, bilateral tax treaty negotiation, BEPS implementation, hybrid mismatches, treaty abuse, permanent establishment, dispute resolution.