SESSION C ASSESSING THE SPECIFIC RULES INTRODUCTION 17-18 April - - PowerPoint PPT Presentation

SESSION C

ASSESSING THE SPECIFIC RULES INTRODUCTION

17-18 April 2014 Tokyo, Japan Yiannis Poulopoulos, Rio Tinto

• Schedule for this session

– Short introduction of the Guidelines to be discussed (specific rules)

– The IMF perspective, Mr Chrsistophe Waerzeggers

– A government perspective, Mr Massimo Morarelli – Rapporteur, Ms Fabiola Annacondia – Discussion with the floor – Possible conclusions

2

• Main Rule = Customer location
• Cases where the main rule would not give

the “right tax result” (criteria)

• Need for “Specific rules”

3

• Not all legislation work on a dichotomy “Main Rule” vs “Specific

rules” but the Guidelines do not recommend doing so

• The aim is consistency in determining appropriate jurisdiction
• f consumption
• The Guidelines do not list supplies on which a specific rule

should apply

• They provide an evaluation framework for jurisdictions to

assess the desirability of a specific rule

4

5

Guideline 3.5 The taxing rights over internationally traded services or intangibles supplied between businesses may be allocated by reference to a proxy other than customer location as laid down in Guideline 3.2, when both the following conditions are met:

• a. The allocation of taxing rights by reference to customer location does not

lead to an appropriate result when considered under the following criteria:



Neutrality



Efficiency of compliance and administration



Certainty and simplicity



Effectiveness



Fairness. b. A proxy other than customer location would lead to a significantly better result when considered under the same criteria

Under Guideline 3.5, a two-step approach is recommended to determine whether a specific rule may be justified:

• First step: test whether the Main Rule leads to an appropriate

result under the criteria set out under Guideline 3.5. Where this is the case, there is no need for a specific rule. Where analysis suggests that the Main Rule would not lead to an appropriate result, the use of a specific rule might be justified. In such case, a second step is required.

• Second step, the proposed specific rule must also be tested

against the criteria of Guideline 3.5. The use of a specific rule will be justified only when this analysis suggests that it would lead to a significantly better result than the use of the Main Rule.

6