In this section you can find information regarding the research projects that are currently being developed by IBFD academic (comprising both internal and collaborative research projects).
Lines of Research
Taxation and the Digital Economy
- PE, including the attribution of income.
- Short-term solutions (Withholding taxes, DST).
- Compatibility of new levies on the digital economy with EU law, WTO and tax treaties.
- Selected digital markets: cryptocurrencies, blockchain and sharing economy.
International Tax Justice
- Tax incentives in the international scene.
- Tax transparency.
- Multilateralism in international taxation.
Abusive and Aggressive Tax Planning
- OECD actions (follow-up to BEPS, including peer-review and implementation in developing countries).
- EU actions (ATAD and related initiatives affecting the internal market and relations with third countries).
- BRICS and developing countries responses to abusive and aggressive tax planning schemes.
The Global Dimension of the Protection of Taxpayers’ Rights
- Observatory on the Practical Protection of Taxpayers’ Rights.
- Mediation, arbitration and settlement of disputes in cross-border tax matters.
- OECD actions and their relationship with taxpayers’ rights.
Flexible Multi-Tier Dispute Resolution in International Tax Disputes
Nowadays there is a global trend towards an increasing number of international tax disputes. On 23 November 2015 the OECD reported statistics regarding the number of outstanding Mutual Agreement Procedures (hereinafter: MAP) of its member states. These statistics reveal an increase of a MAP caseload of 130.57% compared to the reported period of 2006 until 2014. The OECD also noted that the actions to counter the BEPS are likely to give rise to new rules, new interpretations problems and therefore a higher risk of double taxation. A higher risk of double taxation means even more tax cross-border disputes which can jeopardize cross-border trade, foreign investment and economic growth. To counter an excessive growth of international tax disputes it is utmost important to improve the current international dispute resolution procedures.
In international tax disputes the main difficulty is that the disputes have to be resolved between states. The sovereignty of states excludes the possibility of a single judiciary to decide over the case. Moreover in cross-border tax disputes there are two jurisdictions involved and it involves at least three parties: the two contracting states and the taxpayer. In some disputes like transfer pricing cases between related companies there are even more parties involved: at least two contracting states and at least two taxpayers (likely a parent company and its subsidiary). Thus, it is difficult to implement (mandatory) arbitration in international taxation, although some OECD countries already declared their commitment to this solution. Nonetheless, we feel that other types of dispute resolution such as Alternative Dispute Resolution (hereinafter: ADR) should be researched and explored as well. ADR offers various opportunities to maintain the autonomy of all disputing parties, including the taxpayer.
Taxation and Digital Innovation
Some direct tax policy challenges have already been addressed through the BEPS action plan. Moreover, international guidelines on VAT/GST can also be mentioned as progress in this area.
However, more fundamental policy challenges remain regarding inter alia the characterization, valuation and localization of digital transactions. Recent unilateral actions taken by some countries to address these challenges stress the need to promote coordinated responses in this area. Finally, digital innovation raises unforeseen challenges, such as the question of whether and how value created through artificial intelligence should be taxed.
The research project is driven by a realistic and holistic approach: finding policy options that would lead to a feasible change to domestic and international tax rules and could be realistically implemented in an efficient, fair and administrable way.
The project will advocate coordinated and multilateral solutions, with the view to avoiding unilateral responses that may constitute dangerous precedents and result in inconsistent and inadequate outcomes.
International Tax Law and the Protection of Taxpayers’ Rights
Human rights represent a legal domain with consolidated principles and a broad common pattern throughout the world. Taxpayers’ rights are not only relevant to protecting the citizen but also to optimizing the functioning of the tax administration and the tax system in general. Taxpayers’ rights are the cornerstone of a good administration, as well as a powerful tool for the efficiency of tax systems, including a higher level of voluntary compliance, a higher degree of certainty in the amounts of taxes assessed and a higher level of taxes collected.
Therefore, a contemporary vision of tax law is bound to warrant a modern view of taxpayers’ rights, namely one that includes the economic dimensions of their rights. This is indeed a starting point for a line of research on taxation and human rights that is worth exploring on a more general basis worldwide, in search of catalyzing best practices and fostering a common dialogue.
The goal of this research project is to identify minimum standards and best practices around the world for the protection of taxpayers’ rights, while alerting to potential violations and finding feasible policy options for the effective protection of rights.
The tax impact of the sharing economy
BEPS Action 1 identified the challenges raised from a tax policy perspective, both in the areas of direct and indirect taxation. The OECD has identified the sharing economy and the gig economy as part of the digitalized businesses targeted by the new tax rules. These business models raise several challenges for both the tax administrations and the taxpayers.
The sharing economy business model generates two different sources of income. The first is the income that sellers of goods and services produce by exchanging products through the sharing platform. It is possible to tax such income by applying the current standard tax rules. However, new measures need to be designed to allow a proper, accurate and simplified process for identifying and taxing this source of income usually generated by individuals or small traders.
The second source of income related to the sharing economy is the revenue received by owners and administrators of digital platforms that connect bidders and claimants. Income from these platforms could result from several types of transactions, such as fees for the conclusion of contracts through their platform, advertising, etc. The provision of these purely digitalized services raises issues related to the identification of the nexus, source and qualification of the revenue. Clearly, this also results in conflicts in the interpretation and application of treaties. In this case, new rules need to be drafted to properly and fairly allocate and tax the income derived from the platforms. The work of the OECD aims to help ensure the effective taxation of those earning income and avoid the use of unilateral measures that could result in double taxation.
The research project aims to find policy options that would lead to a feasible change in domestic and international tax rules and could realistically be implemented in an efficient, fair and administrable way.