OECD's Tax Challenges
Arising from Digitalisation – Interim Report 2018 (the Interim
Report) released a few minutes ago acknowledges 'divergent views' on
taxation approach and highlights that countries will work towards a
consensus-based solution; The Interim Report notes that there is no consensus
on the merits of, or need for, interim measures, and does not make a
recommendation for their introduction; The Interim Report agreed by the
more than 110 members of the Inclusive Framework outlines a number of
areas where there are clear differences of view among the countries, including
over the need for future reform of the international tax system; The
Interim Report provides a sense of direction that reflects the commitment
of the Inclusive Framework members to work towards a consensus-based, global
solution on these matters; The Interim report sets the goal of
producing a final report in 2020, with an update to the G20 in 2019; The
Interim Report notes that the "members agreed to undertake a coherent and
concurrent review of the “nexus” and “profit allocation” rules - fundamental
concepts relating to the allocation of taxing rights between jurisdictions and
the determination of the relevant share of the multinational enterprise’s
profits that will be subject to taxation in a given jurisdiction";
The Interim Report discusses interim measures that some countries have
indicated they would implement, believing that there is a strong imperative to
act quickly; The Interim Report specifically considers an interim measure in
the form of an 'excise tax' on the supply of certain e-services within their
jurisdiction that would apply to the gross consideration paid for the supply of
such e-services; The Inclusive Framework’s Task Force on the Digital Economy
will meet next in July 2018; The report cites India has adopted rules for
the VAT treatment of B2C supplies of services and intangibles by foreign
suppliers in accordance with the OECD International VAT/GST Guidelines; The
Interim report also describes in details India's Significant Economic
Presence based taxation, Equalisation levy & cites Bangalore ITAT ruling
on “virtual service PE”
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