Wednesday, April 6, 2022
Avi-Yonah, Kim & Sam: A New Framework For Digital Taxation
Reuven S. Avi-Yonah (Michigan; Google Scholar), Christine Kim (Utah; Google Scholar) & Karen Sam (Michigan), A New Framework for Digital Taxation, 63 Harv. Int’l L.J. __ (2022):
The worldwide tax regime has extensive implications for enterprise, commerce, and the worldwide political economic system. Underneath present regulation, multinational enterprises don’t pay their fair proportion of taxes to market nations the place income are generated as a result of market nations are solely allowed to tax firms with a bodily presence there. Digital firms, like Google and Amazon, can function completely on-line, thereby avoiding market nation taxes. Multinationals may exploit current tax guidelines by shifting their income to low-tax jurisdictions, thereby avoiding taxes within the residence nation the place their headquarters are positioned.
Just lately, a world tax deal was reached to sort out these points. Proposed by the OECD/G20 Inclusive Framework and endorsed by practically 140 nations, this international tax deal units forth two Pillars that reform the outdated worldwide tax regimes. Pillar One addresses digital taxation whereas Pillar Two addresses a world minimal tax. Nonetheless, it’s uncertain that the worldwide tax deal might be efficiently carried out, particularly with respect to Pillar One. As the small print of Pillar One have change into more and more complicated and degraded by political compromises and carve-outs, it dangers being a framework with out substance. Additionally, nations are unlikely to repeal a longtime tax instrument, Digital Providers Taxes (“DSTs”), which is an adamant requirement of the USA in adopting Pillar One.
This Article presents the primary complete critique of the worldwide tax deal and assesses its prospects and issues. It evaluates the U.S. responses to the proposed international deal and to DSTs. It presents the challenges, comparable to treaty overrides, that may happen if the USA implements Pillar One by government settlement in order to bypass the treaty ratification. This Article suggests separating the 2 Pillars to protect the worldwide minimal tax. Relating to DSTs, the Article gives a number of empirical research that reveal the hurt retaliatory tariffs trigger. Lastly, it endorses the U.N. digital taxation proposal and proposes a brand new Information Excise Tax as a normative different.
https://taxprof.typepad.com/taxprof_blog/2022/04/avi-yonah-kim-sam-a-new-framework-for-digital-taxation.html
