Transfer Pricing,Taxing Rights over Cross-Border Sales Income and the OECD Two-Pillar Response

The confluence of several factors including government fiscal pressures and growing opportunities for tax minimization in a digital economy prompted the OECD to embark on a program to reduce base erosion and profit shifting(BEPS).At the same time,countries became increasingly unhappy about international tax rules that left them unable to impose income taxes on companies earning profits by selling to customers inside their country without establishing a taxable presence there.The frustration led to unilateral responses that prompted the OECD to develop proposals to address this problem as well.The OECD’s proposals to reduce profit shifting and enhance taxing rights of sales destination countries evolved into what are now known as Pillar One and Pillar Two international tax reforms.This paper provides an overview of the operation of each of the Pillars and notes the limitations that prevent them from addressing the underlying causes of profit shifting and providing full taxing rights to sales destination jurisdictions.

The Use of Digital Technology by Belt and Road Tax Administrations

The growing trading links in the modern world have made it more difficult for tax administrations to monitor the activities of multinational enterprises(MNEs)operating on their territory.Advanced technology and communications have been used by MNEs to increase the scope of their operations and create global supply chains,while tax administrations try to use limited resources to apply the tax rules.The development of digital technology within government can help tax administrations to implement the latest international tax rules and monitor taxpayer activities more completely,improving domestic resource mobilisation.A benefit of more digitalisation for tax administrations is the ability to manage data and use analytical tools to make the best use of the data acquired.Wider international tax cooperation has provided tax administrations with access to information from country-by-country(CbC)reporting,the common reporting standard(CRS)and the exchange of tax rulings.These give tax administrations access to large volumes of data in relation to cross-border activities to facilitate risk assessment.Digitalisation can also reduce the compliance burden of taxpayers by making it easier to complete their tax obligations,helping them to integrate taxation processes into their routine business systems.Full use of technology combined with adequate governance can boost the efficiency of tax administration.The Belt and Road Initiative Tax Administration Cooperation Mechanism(BRITACOM)can be a platform for cooperation among tax administrations to gain more efficiency.It is important for BRI tax administrations to learn from each other through sharing their knowledge and experience in the introduction of digital technology.

Navigating the Development of International Tax Regulation in Indonesia

The area of international taxation is constantly evolving due to factors including globalisation,technological advancements,and the economy’s increasing digitalisation.In recent times,there has been an increased focus on addressing tax avoidance,promoting tax justice,and addressing tax issues resulting from the digitalisation of the economy.One of the most significant developments in international taxation in recent years was the BEPS Action Plan and the Two-Pillar Solution framework proposed by the OECD and G20 on BEPS.Indonesia released Government Regulation No.55/2022,which includes regulations on international tax matters,among other things,in response to the globalisation of international taxation.Apart from that,Indonesia is considering applying Amount B as a rule or safe harbour provision because of the dynamics surrounding international tax.Overall,a strong correlation exists between the transformation of international taxation worldwide and the shifts in Indonesia’s international field.

DISCIPLINED APPROACHES FOR CONSTRUCTING A RULE OF LAW ORDER： RECONSIDERATIONS REVISED AN ACUTE QUEENING MOVE FOR CHINA＇S TAXATION LEGAL REFORM： ISSUES AND PROPOSALS

China＇s fiscal and taxation law reform is at a critical stage since Chinese economy development needs to consider compromising interests and conflicts from all sources, such as the social benefit network, real estate industry avidity, internationalizing currencies, fostering a philanthropic culture, and growing as a leader in the world market. These undertakings all demand a modern, handy fiscal and taxation law system. On the other hand, after two decades of implementation of the 1994 tax sharing system, the original initiative of strengthening centralized control might not keep pace with the needs of balancing decentralization and local financing demands, in addition to the troublesome taxpayers＇ protection, tax judicature reform, and worsening environmental irregularities. Admittedly, China＇s fiscal and taxation law reform faces new challenges and incentives. Rigorous international tax frameworks and multi-jurisdictional cooperation drive China to respond as an international trade giant and a responsible game player. Such international tax policy orientations create another layer of incentives and necessity for China to fine-tune its domestic fiscal and taxation legal framework, ranging from promotion of free trade zones, global sourcing practice and supply chain management, renegotiation of outdated tax treaty articles, more active participation in consequential overseas investments, to WTO Protocol compliance review, and international tax dispute resolution. Therefore, this article argues that, no matter the extent to which feasible, plausible or pragmatic proposals are presented, a top level architecting and a serious pursuit to upgrade citizens＇ livelihood must be prioritized in earnest.

Enhancing the Capacity of Tax Administrations to Develop Tax Policy

Building capacity in tax administrations will be key in coping with the new challenges arising from the new ways of doing business.This article discusses three topics that will require the building of new assessment and tax collection capabilities within tax administrations,namely:the digital economy,cryptocurrency taxation,and environmental taxation.It proposes issues that will require further attention and consideration by tax administrations wishing to collect the rent attributed to these activities.It is contended that new capacities will have to be developed not just to handle the“new”forms of doing business,but also to generate income and to allow for a harmonized environment that facilitates and draws investment to Belt and Road Initiative jurisdictions.The transformation ought to occur while“traditional”issues in international tax administration and cooperation persist.

Enhancing Tax Administration Capacity Building: Macao SAR Experience

The fast pace of development in the international tax matters requires enhancement of tax administration capacity building.The outcomes of the Final Report of the Enhancing Tax Administration Capacity Task Force released in September 2021 confirmed the increasing demand of the BRI jurisdictions for capacity building in international taxation.This article reflects on possible areas and approaches for capacity building enhancement.It proposes some initiatives that may be developed to help address the gaps among the BRI jurisdictions and contribute to building the capacities of their tax officials.This reflection is made with a view drawn from the experience of the Macao SAR as one of the first Belt and Road Initiative tax academies.

Improving Taxation of Income from International Transportation——Study on Jurisdictions Covered by the Belt and Road Initiative

The goals pursued by the Belt and Road Initiative(BRI)and the role played by international transportation on the development of cross-border trade suggest a focused review of issues dealing with taxation of transportation income derived from the operation of ships,railways and trucks in international traffic.This article covers an analysis of some of the treaties concluded by certain BRI jurisdictions and the possible ways of improvement of the tax regime applicable to taxation of international transportation either through international administrative cooperation or treaty legislation.

Mastering the COVID-19 Crisis from a Tax Perspective

The COVID-19 crisis confronts governments and business with unparalleled challenges.It raises the question how tax measures can help to quickly relieve the stress put on business by the lockdowns and corresponding decrease in business volume and cash-flow.The article covers various options that mostly have already been implemented or are about to be implemented in various jurisdictions including BRI jurisdictions.It also addresses some more indirect effects of the crisis including increasing visibility of the apparent flaws in the international tax system as well as the need to recover the current financial investments by governments in the future.