Recent and Emerging Trends in Raising Tax Certainty on Cross-Border Transactions

Raising tax certainty constitutes a fundamental for investment de-cisions by multinational enterprises(MNEs)while it is highly valuable also for tax administrations.Therefore,it has been considered as one of the core areas by the BRITACOM parties.Over the past few years,considerable attention has been devoted to improving tax certainty while new challenges arise.This article analyses some of the recent advances and emerging initiatives in terms of raising tax certaintywww.britacom.org mechanisms for cross-border transactions in areas such as dispute prevention and resolution,transfer pricing,General Anti-Avoidance Rules(GAARs)and the taxation of digital economy.

Pursuing Tax Certainty in International Taxation

This article addresses the issue of tax certainty with emphasis on certainty in international taxation.It also discusses the most important methods and measures used to create and enhance tax certainty.

Some Thoughts on Tax Certainty

The G20/OECD BEPS Project has resulted in many changes to both domestic law and tax treaties,including the adoption of anti-hybrid rules,earningsstripping rules to restrict the deduction of interest expenses,enhanced transfer pricing rules and a multilateral treaty modifying hundreds of tax treaty changes.These extensive changes led to calls from both taxpayers and governments for enhancements to tax certainty.The BRITACOM has embraced these calls for enhanced tax certainty and made it one of its priority action items.This article puts current discussions about tax certainty into a broader context of the international tax system.It describes the nature and importance of tax certainty as a fundamental tax policy goal as well as the frequent conflicts between certainty and fairness in designing tax legislation and reviews the recent work of the IMF,the OECD and the BRITACOM on tax certainty.The article then explores the major sources of uncertainty,including deficiencies in tax legislation and tax administration,and discusses some methods for improving tax certainty for developing countries,including drafting better tax legislation,streamlining tax administration and adopting more efficient dispute-resolution mechanisms.

Tax Certainty Challenges and Opportunities from BEPS 2.0 in BRI Jurisdictions

BEPS 2.0 is set to have a profound effect on the Belt and Road jurisdic-tions’ tax certainty environment. In the initial stage, a heightening of tax uncertainty can be envisioned, though in the longer term there is reason to be optimistic that a new and more certain BRI tax environment will emerge, in which the BRITACOM can play a crucial role.

Raising Tax Certainty:Experience in Hong Kong SAR,China

An effective mechanism for dispute prevention and resolution is im-portant to both tax administrations and taxpayers in achieving tax certainty.The Hong Kong Special Administrative Region of the People’s Republic of China(Hong Kong)has implemented frontend dispute prevention and backend dispute resolution mech-anisms,including advance ruling,advance pricing arrangement(APA)and mutual agreement procedure(MAP)systems.This article explains in detail the requirements and procedures and shares the practical experience relating to advance ruling,APA and MAP in Hong Kong region.

Raising Tax Certainty in Singapore

Tax certainty is key for both businesses and governments to optimise investments and economic progress.This article shares the experience of the Inland Revenue Authority of Singapore and the approaches taken to provide a more certain tax environment for taxpayers.

Raising Tax Certainty in Cross-Border Tax Disputes Through a Body of Experts

In this article,we draw attention to raising tax certainty in cross-border tax disputes through a body of experts(BoE).Establishing and developing of a BoE on a non-legally binding basis to help prevent and resolve cross-border tax disputes aims to facilitate harmony in the dynamically evolving international tax environment.This,hopefully,elevates Confucius’everyday wisdom of“harmony is precious”to the global tax arena.

Can Tax Cooperation“Show”the Way into the Future of Sound and Steady Development?

Tax cooperation is a foundation for tax certainty thereby contributing to an investment climate that fosters sustainable economic growth.To make tax cooperation effective,a platform for jurisdictions to exchange thoughts and align ap-proaches is needed.The BRITACOM has established itself as such a relevant platform for its members and already achieved many great results,e.g.when it comes to ca-pacity building via the establishment of the BRITACEG and its Curriculum.But there are many more opportunities,one of which could be the establishment of a joint dispute resolution body.

Dutch Transfer Pricing Court Case on Business Restructuring:Preventing Transfer Pricing Disputes by Getting Certainty in Advance

This article summarizes a Dutch court case regarding a business restructuring within a multinational enterprise,where the valuation of the transferred business activities was not confirmed by the tax authorities in advance.As a result of the lack of certainty beforehand,the taxpayer experienced a significant tax correction.According to the author’s perspective,this situation could have been prevented by seeking certainty in advance.

Measures to Improve Business Environment from a Tax Administration Perspective:The Case of Inland Revenue Board of Malaysia

This paper reviews the literature on the sources of tax uncertainty in tax administration dimension and its effect on taxpayers.It examined two measures taken by the Inland Revenue Board of Malaysia(IRBM)which are the Advance Ruling(AR)and Advance Pricing Arrangement(APA)as dispute prevention and early issue resolution in addressing tax uncertainty.This study found that while the AR and APA have been made and issued,and succeeded in providing tax certainty to the taxpayers,their application is limited.This is reflected in the small number of AR issued and APA that have been made.There is a need to widen the scope by implementing other measures such as the Cooperative Compliance Programme which is already under consideration by IRBM to introduce.

Preparing for Pillars One and Two: How Tax Administrations Can Get Ahead of the Game

Implementing and complying with the requirements of the OECD/G20 Inclusive Framework’s Two-Pillar solution presents enormous practical challenges for taxpayers and tax administrations.Not least of these is a complex data challenge with over 120 data points needed for Pillar 2 alone.To tackle these effectively,tax administrations should work with each other,and with taxpayers,to develop a coordinated approach drawing on the concept of Cooperative compliance.Such an approach should aim to reduce the administrative burden,increase certainty,and provide a joint learning curve for tax administrations and taxpayers.Developing the right data systems and training people to work with the data will take time and need to start now;if businesses and tax administrations wait until all the rules and regulations have been finalised,it will be too late.In addition,the Pillar 2 Model Rules do not provide for a multilateral mechanism to determine and allocate the top-up tax.The Belt and Road Initiative jurisdictions could consider working together to develop a binding mechanism to allocate the top-up tax between themselves.

New Technologies and Transfer Pricing in the BRI Jurisdictions

This paper explores the linkage between emerging new technologies and transfer pricing,and the mechanisms available to minimise and resolve disputes in this area.It explores the way that these technologies can help achieve a better application of the Arm’s Length Principle(ALP)which remains the bedrock for transfer pricing around the world.It also identifies the way that both MNEs and Tax Administrations can use these technologies to get access to more comparable information and to achieve greater consistency in the allocation on the basis of the ALP.Finally some new ways of achieving more effective cross-border resolution mechanisms in the BRI jurisdictions are explored.