Boston 2012 Congress Scientific Program
SUBJECT 1
Enterprise Services
Cross-border trade in commercial services in some countries now exceeds cross-border trade in goods. Cross-border commercial services in some way affect all persons, whether as provider or consumer or intermediary. However the tax and treaty rules for trade in services are often less developed and uniform than the rules for trade in goods. This would present problems even if services income implicated only a narrow set of tax rules, but services income raises complex issues relating to determination of source, nexus for taxation and allocation, transfer pricing and other areas of international taxation. Among the unsettled questions are even the fundamental issues about the classification of certain activities as the provision of services and the significance of the place of performance or consumption of services. The major models of the OECD and the UN have different approaches. This session will consider the practical and policy aspects. Particular attention will be paid to the different treaty approaches, dichotomy between the International models, identification and choice of source, classification and attribution issues, high value services and the requirements of presence in the host country of some duration.
General Reporter: Ariane Pickering (Australia)
Chair of the Plenary Session: Porus F. Kaka (India)
SUBJECT 2
The Debt-Equity Conundrum
The distinction between debt and equity has major ramifications for the tax and financial systems of many countries. For example, domestically, taxpaying entities may have a tax incentive to issue debt, while the domestic holders of the debt may tend to be persons enjoying a more favorable tax status. Internationally, a country may wish to attract investment capital from offshore, but attracting debt capital may erode its tax base, particularly if hybrid entities or instruments give investors the benefit of deferral or exemption. Where the lender is a related party, the economic significance of the debt-equity distinction diminishes while the tax incentive to lend increases. This Panel will consider the history of the debt-equity distinction and the critical policy and tax planning issues arising from it. The Panel will draw on developments over the years to consider the substance of the debt-equity distinction, the appropriateness of existing tax incentives to leverage cross-border investments, and possible alternative regimes.
General Reporter: Patricia Brown (USA)
Chair of the Plenary Session: Machiel Lambooij (The Netherlands)
Seminars
SEMINAR A: Penalties and Domestic Law Dispute Resolution Procedures
This Seminar will examine how countries employ penalties and dispute resolution mechanisms to enhance taxpayer compliance with income tax laws. The Seminar will consider best practices in the design of tax penalties and dispute resolution mechanisms, taking account of differences in the nature and context (as domestic or cross-border) of the tax issue in controversy, and attempt to develop a framework to assist policymakers in designing these rules.
Chair: Stephen Shay (USA)
SEMINAR B: Cross-Border Arbitrage
The Seminar will focus on a discussion of the theme – Is there anything wrong with cross-border tax arbitrage, and if so, what is wrong with it? Why have various tax authorities found it objectionable (and when have they not) and what have they done about it when they have? The theme will be illustrated by a discussion of various forms of arbitrage, the policy reasons why one or more jurisdictions might find the arbitrage objectionable and the reactions of tax authorities to those forms. The illustrations will seek to demonstrate that arbitrage is not a single thing – that in principle it is neither harmful nor harmless, but very much depends upon which rules are being arbitraged and whether the economic results are consistent with underlying economic and fiscal policy. Arbitrage also indicates the limitations of the rules adopted by the state whose rules are being arbitraged. Often the problem is not arbitrage; rather, arbitrage is a symptom of a more fundamental problem with the rules that have been arbitraged.
Chair: Andrew Solomon (USA)
SEMINAR C: Mutual Agreement Procedure and the Resolution of Cross-Border Disputes
Cross-border transactions, operations, investments and employment have grown rapidly in recent years. Along with this growth has come an increase in instances of double taxation that are not resolved by the terms of a tax treaty, as well as instances of ambiguity regarding how domestic law and treaties apply. To resolve these cases, the need for competent authority case resolution has never been greater. As the competent authority caseload increases, however, practical problems arise that were not apparent before. For example, an increasing number of cases may take an increasing amount of time to resolve, potentially resulting in effective deadlock. Moreover, practical issues regarding the conduct of cases and how competent authority cases interact with domestic law dispute resolution mechanisms are presenting themselves.
Chair: Carol Dunahoo (USA)
SEMINAR D: Article 3(2) and the Scope of Domestic Law
The rule of interpretation enshrined in Article 3(2) OECD MC raises fundamental issues which will be discussed in this seminar by means of examples derived from domestic court decisions and administrative practices from the countries represented on the Panel. Following a general introduction, the issues to be discussed by the Panel include: (i) Does the reference to domestic law include judicial abuse of rights doctrines and the application of GAAR? (ii) Can the meaning of treaty terms be changed simply by changing their domestic law meaning? (iii) How should it be determined that the "context" requires a different meaning? Other issues dealt with during this seminar are the interpretation of treaties not including the rule of Article 3(2) OECD MC and the implementation of the OECD solution to "conflicts of qualification".
Chair: Frank Engelen (Netherlands)
SEMINAR E: VAT and Nonresident Sellers
All forms of remote selling, including e‑commerce, present significant challenges to the design and implementation of VAT systems based on the destination principle. It is increasingly easy for non-resident, non-established suppliers to supply goods and services to customers in another country, not only to other businesses but also to consumers, and this challenges the image of VAT as a robust revenue collection tool that is resilient to avoidance and evasion and leaves little scope for non-taxation. This Seminar will examine how VAT systems address the issues posed by non-established, non-resident suppliers of goods and services. Using case studies, Panel members will seek to consider, by reference to their own countries’ laws, any differences between the treatment of B2B and B2C supplies, inbound and outbound supplies, and tangible and intangible supplies. The Panel will assess whether such differences enhance or detract from the external neutrality of the VAT system and identify “best practices” with respect to imposing VAT on remote or non-resident sellers. The focus of the seminar will be on the collection of VAT on inbound B2C supplies and the prevention of non-taxation, but the seminar will also consider the prevalence of, and responses to, B2B evasion (carousel fraud, round robin transactions).
Chair: Rebecca Millar (Australia)
SEMINAR F: IFA/OECD: "Now you see it, now you don't: the elusive concept of permanent establishment"
In October 2011, the OECD released a discussion draft that included a number of proposed changes to the Commentary on Article 5 (permanent establishment). After an update on the tax work of the OECD and a general review of these proposed changes, the panel will discuss some of the most important or controversial changes included in the discussion draft, focusing on practical situations.
Chair: Richard Vann (Australia)
SEMINAR G: Developments in Cross-Border Taxation in the Latin American Region
This Seminar will explore recent developments in cross-border taxation in the Latin American region, specifically focusing on the most important international tax matters that concern foreign investors conducting businesses in this region. Countries in Latin America have been extremely active for several years, both in refining their rules of domestic law relating to international tax matters and in expanding their networks of bilateral tax treaties. The interpretation and application of treaty provisions, and the integration of tax treaties with tax provisions in bilateral investment treaties and regional compacts, have become pressing topics. This is true both for tax treaties patterned after the OECD Model and for those closer to the UN Model. In addition to treaty interpretation, another hot topic in Latin America refers to general anti-avoidance rules. Like countries in other regions, Latin American countries have improved their controls on the so-called tax planning along the years, and knowing the local tax authorities' and local courts' views on this matter is essential to avoid future tax contingencies.
Chair: Ana Claudia Utumi (Brazil)
SEMINAR H: Cross-Border Charitable and Other Pro-Bono Contributions
Charitable contributions have roughly doubled over the past decade in the United States. Similar trends have been observed in other countries and are expected to continue. The tax treatment of cross-border contributions is generally less advantageous than that of contributions at a domestic level. This is true for both the donor and the recipient of the contributions. The Seminar will address the tax treatment of cross-border charitable and other pro bono contributions based on a case study and seek solutions for improvement.
Chair: Prof. Dr. Otmar Thömmes (Germany)
SEMINAR I: International Telecommunications Income
Income from international telecommunications is growing rapidly and, by definition, internationally mobile. This seminar examines how international telecommunications income is taxed in the residence country and/or the source country and explores the potential gaps and overlaps in the current system. Specific topics include the characterization and sourcing of income, the jurisdictional basis for source country taxation, double taxation, transfer pricing and administrative and compliance challenges. Panelists will present views of both developed and developing countries and share their insights on policy and practical matters.
Chair: Jinyan Li (Canada)
SEMINAR J: Recent developments in international tax
This Seminar will look at a number of recent developments of significance to the international tax community not covered elsewhere on the programme. We will examine these developments with the aid of an expert Panel drawn from practice, government and academia. The final selection of topics will not be made till the Congress to ensure we do not miss any particularly crucial development. The final selection will be announced at the start of the Seminar, but the Panel may still pull a wild card.
Chair: Philip Baker (United Kingdom)
SEMINAR K: IFA/EU: Taxation of financial transactions
In the context of the recent financial crises, different instruments have been discussed internationally to make the financial sector pay its “fair share” to governments. Next to bank levies, the highly controversial financial transaction tax (FTT) is a major component of this emerging international tax panorama. In September 2011 the European Commission put forward a draft directive on the FTT, individual Member States consider its introduction or the modification of existing levies (stamp duties). The seminar will focus on recent proposals at the domestic and international level, assess their scope and impact and discuss policy options. From a legal view, the international dimension of financial transaction taxation will play a role.
Chair: Malcolm Gammie (United Kingdom)
SEMINAR L: Limitation on Benefits Articles in Income Tax Treaties: The Current State of Play
This Seminar will deal with the current status, interpretation, and effectiveness of “comprehensive” Limitation on Benefits (“LOB”) articles in income tax treaties. This type of article can be traced back to the US Treasury Model Income Tax Convention of 1981 and has become an essential fixture of negotiated US treaties. Over the years it has expanded and evolved and, in recent years, the LOB article has been adopted by several other countries.
Chair: Daniel Gutmann (France)
