New profit allocation model under BEPS 2.0
Economics & Management
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First published on this website: 14.09.2019 - 15:19
Abstract
On 31 May 2019, the OECD published the Program of work to deal with the tax challenges arising from the digitalization of the economy [1], [2], [3]. The main purpose of the Program is to develop new principles of taxation in the digital world, which are called by many as BEPS 2.0. It is planned to finish the Program at the end of 2020. The document considers the three different methods of profit allocation, which is earned on digital sales, for the purposes of its taxation in the jurisdictions where a seller does not have physical presence (hereinafter – market jurisdiction).In this article, the author proposes the implementation approach for the one of three methods and gives an answer to the problematic questions of application of that method, raised by the Program.
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References
[1] Action 1 Tax Challenges Arising from Digitalisation. (2019). Retrieved from http://www.oecd.org/tax/beps/beps-actions/action1/
[2] Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalisation of the Economy. (2019). Retrieved from https://www.oecd.org/tax/beps/programme-of-work-to-develop-a-consensus-solution-to-the-tax-challenges-arising-from-the-digitalisation-of-the-economy.pdf
[3] OECD Public Consultation Document. Addressing the tax challenges of the digitalisation of the economy. (2019). Retrieved from https://www.oecd.org/tax/beps/public-consultation-document-addressing-the-tax-challenges-of-the-digitalisation-of-the-economy.pdf
[4] OECD Transfer Pricing Guidelines for Multinational Enterprise and Tax Administrations. (2017).Retrieved from http://www.oecd.org/tax/transfer-pricing/oecd-transfer-pricing-guideline...
[5] OECD Draft handbook on transfer pricing risk assessment. (2013). Retrieved from https://www.oecd.org/ctp/transfer-pricing/Draft-Handbook-TP-Risk-Assessment-ENG.pdf
[6] International valuation standards. (2017). Retrieved from http://www.cas.org.cn/docs/2017-01/20170120142445588690.pdf
[7] Bureau van Dijk. Retrieved from https://www.bvdinfo.com/ru-ru/our-products/company-information/international-products/orbis
[8] KPMG US Presentation “Value Chain Analysis – Aligning Income with Value Creation”. (2019). Retrieved from https://tax.kpmg.us/content/dam/tax/en/pdfs/2019/uscbtc/uscbtc-2019-value-chain-analysis-final.pdf
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