Is VAT also a corporate tax? Untangling tax burdens and benefits for companies

The Great Financial Crisis has increased concerns about whether corporations are paying a ‘fair’ amount of tax in different countries. This begs the question of what a ‘fair’ amount of tax is. The question is complicated by the continuing lack of clarity about the economic incidence of corporate income tax. Recently, it has been argued that the location of the sales revenue (turnover) of a corporation is relevant in determining the fair allocation. Of course, in many countries there is already a tax based on sales, value-added tax (VAT), also called goods and services tax (GST). This paper explores an illustration, arising from a series of cases before the European Court of Justice, of how VAT can impose a burden on corporations. The illustration raises issues of principle for VAT, but also offers lessons about how we tax corporations, particularly given proposals such as for digital sales taxes in the EU and the idea of a destination-based cash-flow tax included in legislative proposals in the US in 2016. This article explores the puzzles raised by the illustration and shows how it can throw light not only on the nature of VAT but also on the incidence of corporate income tax

Limits to globalisation: some implications for taxation, tax policy, and the developing world

Globalisation is a phenomenon that is said to have radically changed the international economy. It is said to have radically limited the power of national governments, particular in the field of taxation, in a world of highly mobile capital and flexible transnational corporations. To explore the extent of the effects of globalisation on taxation, this article discusses some ideas about how we should look at international tax policy in the face of the realities of globalisation, particularly in a world that includes developing countries, by considering the differences between different discourses on taxation, such as the economic, the legal, and the policy discourses. The policy discourse can offer new perspectives on the old question of the choice between source and residence taxation, makes it possible to understand them in terms of tax fairness criteria, and gives rise to a new criterion: the participation principle. Not only does the participation principle provide interesting approaches to some cases of concern to developing countries that have traditionally been viewed as source taxes, but the rise of digital goods do not simply shift the location of taxed activities. They can also offer creative opportunities for the developing world

Transfer pricing disputes in the United Kingdom

Via a global analysis of more than 180 transfer pricing cases from 20 representative jurisdictions, Resolving Transfer Pricing Disputes explains how the law on transfer pricing operates in practice and examines how disputes between taxpayers and tax administrations are dealt with around the world. It has been designed to be an essential complement to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, which focus on transfer pricing issues but do not refer to specific transfer pricing disputes. All of the transfer pricing cases discussed in the book are linked to the relevant paragraphs of the OECD Guidelines by means of a 'Golden Bridge', namely a table listing the cases according to the paragraphs of the Guidelines to which they refer. It therefore provides examples of the application of the Arm's Length Principle in many settings on all continents

United Kingdom country report

Tax Treaties and Domestic Law provides an in-depth analysis of the relationship between tax treaties and domestic law. It begins from an analysis of the topic from a constitutional and an international point of view, with a particular emphasis on the provisions laid down by Articles 26 and 27 of the Vienna Convention on the Law of Treaties. Special reports focus on tax treaty issues. In this context, specific problems raised by tax treaties are considered, such as treaty overrides and anti-abuse measures. The interaction between treaty provisions and domestic law is taken into consideration. Individual country surveys show how the issues raised by the relationships between tax treaties and domestic law are resolved by tax administrations and courts in selected European and non-European countries. A specific chapter is devoted to an analysis of how the relationships between tax treaties and domestic law can be improved in the fields of treaty override, treaty residence and anti-abuse measures

Interpreting exceptional VAT legislation: or, are there principles in Pringles?

John F. Avery Jones famously argued in 1996 that principles-based interpretation and drafting of tax legislation offered the opportunity to have less detailed rules, supported by legislated principles, without a loss of certainty, and used the operation of the EU VAT system in the UK as an example. Following the recent Procter & Gamble (UK) v HMRC case on the VAT classification of Pringles, this article explores what happens when we encounter rules that operate outside the scope of such principles. We also find that the UK and German rules classifying food types are strikingly different. If such rules may lack any obvious principled basis, must we simply interpret all such provisions on a plain-meaning basis? In fact, there are interesting possible approaches to the interpretation of such rules. First, the principles, outside of which they lie, may offer more guidance than initially appears, especially in a strongly principled environment like VAT. Secondly, many apparently vague rules, which Kaplow would call ex-post specified “standards”, contain semantically rich and well-understood concepts. As the Pringles case shows, such semantic rules can offer more certainty when applied directly, than by trying to extract from them specific tests through elaborate and reductive legal reasoning