PARALLEL SESSION A DETERMINING CUSTOMER STATUS AND LOCATION MAIN - - PowerPoint PPT Presentation

PARALLEL SESSION A

DETERMINING CUSTOMER STATUS AND LOCATION – MAIN RULE INTRODUCTION

Moderator - Kerstin Alvesson, Swedish Tax Agency 17-18 April 2014 Tokyo, Japan

• Schedule for this session

– Short introduction of the Guidelines to be discussed (supplies to single location entities) – A government perspective, Mr Nii Ayi Aryeetey – A business perspective, Mr Alain Cornet – Rapporteur, Mr Brendan Lynch – Discussion with the floor – Possible conclusions

2

• Guideline 3.1 – destination principle

”For consumption tax purposes internationally traded services and intangibles should be taxed according to the rules of the jurisdiction of consumption.”

• Guideline 3.2 – customer location

”For the application of Guideline 3.1, for business-to- business supplies, the jurisdiction in which the customer is located has the taxing rights over internationally traded services or intangibles.”

3

• Guideline 3.2 – customer location

– The main rule for business-to-business is customer location. – Appropriate proxy as it achieves the objective

• f neutrality.

– The rule means that the jurisdiction of the customer’s permanent business presence has the taxing rights over the transaction.

4

• Guideline 3.3 – business agreement

”For the application of Guideline 3.2, the identity of the customer is normally determined by reference to the business agreement.”

• The business agreement is expected to reflect the

underlying supply.

• The business agreement will assist

– the supplier, – the customer and – the tax administrations.

5

• The business agreement consists of the elements

that identify the parties to a supply and the rights and obligations with respect to that

• supply. They are generally based on mutual

understanding.

• The business agreement could be written or oral

and it is not restricted to a contract.

6

Country A Country C Country B Call Centre Provider Zero- rate Reverse charge

7

Customer

Physical supplies (calls) directly to MNE subs

Business Agreements

Global contract Central procurement

R/C R/C

Call Centre Services

0-rate