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   October 2016  
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World Tax Journal
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Issue No. 3 - 2016 of the World Tax Journal is now available online.

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Number 3 - 2016 contains the following:

The Multilateral Tax Instrument and Its Relationship with Tax Treaties

Nathalie Bravo

The multilateral instrument to modify bilateral tax treaties is one of the most important and innovative initiatives of the last decades in international tax law. The article aims to contribute to the understanding of the relationship between existing tax treaties and the multilateral instrument once it enters into force. After an in-depth assessment of precedents and literature in public international law and international tax law, the author concludes that, since the provisions of the multilateral instrument and the provisions of tax treaties will coexist, conflicts of treaties may arise. To ex ante resolve these conflicts, the multilateral instrument can provide for compatibility clauses. In their absence, according to the Vienna Convention on the Law of Treaties, the lex posterior principle will apply. The convenience of adding compatibility clauses to the multilateral instrument or using the lex posterior principle depends on the object and purpose that the ad hoc Group currently negotiating the multilateral instrument will assign to it. If compatibility clauses are implemented, it can be anticipated that part of the success of the instrument will lie in the good design of these clauses. Therefore, the article also provides suggestions about the ideal design of the compatibility clauses, taking into account that tax treaties often use different terminology and have different enumeration styles, different wording, and even different scopes.

Joint Tax Audits: Which Countries May Benefit Most?

I.J.J. Burgers and D. Criclivaia

In their joint fight against tax avoidance and tax evasion, international governance organizations have developed different tools. One of these tools is the joint tax audit, in which two or more countries join together to form a single audit team to examine an issue(s)/transaction(s) of one or more related taxable persons with cross-border business activities. International governance organizations, such as the Organisation for Economic Co-operation and Development (OECD), the European Union and the African Tax Administration Forum (ATAF), promote the use of joint tax audits, amongst others, as a tool in fighting tax fraud, tax evasion and aggressive tax planning. The literature on this phenomenon mainly focuses on the advantages and obstacles of using the instrument, and the need to amend legislation. Moreover, in the literature, guidance for companies invited to participate in a joint tax audit can be found, as well as references to the few joint tax audits conducted and the results of a pilot project conducted by the Netherlands and Germany. The authors’ aim is to answer the question, “Which countries may benefit most from joint tax audits if the arguments raised in the tax literature are valid?”. The authors have identified eight arguments for joint tax audits (arguments (a) – (h), see sections 4.1. and 5.) in the tax literature and have used sixteen different yardsticks (factors 1 – 16, see section 6.) to analyse which countries might benefit most. To make the research project manageable, the research focuses primarily on the situation faced by the European Union’s 28 Member States (hereinafter the “EU-28”) and the 13 associated states. By combining arguments raised in the legal literature about joint audits with what public finance data tell us about, for example, tax compliance costs, the number of active taxpayers per administration employee, the number of mutual agreement procedures, tax compliance and tax moral levels, the authors analyse which of the EU-28 and its associated states might benefit most from joint audits and for what reasons. The analysis strongly supports the international governance initiatives for a multilateral legislative framework on joint audits. As multinational legislation in this field should be drafted with great care, the authors call for more pilot projects with, as their aim, the sharing of know-how and building capacity. The authors also provide some recommendations for the development of the multinational legislative framework and urge tax authorities/the OECD/the European Union to publish statistics on the joint audits performed.

Tax Residence of Individuals within the European Union: Finding New Solutions to Old Problems

Federica Pitrone

The productive and intense discussion on how to tackle tax avoidance and double non-taxation is casting a shadow over a very relevant and still unresolved issue within the European Union: double taxation. The latter is an obstacle that can hamper the effectiveness of the internal market and create tax injustice and, therefore, it should be considered as important as double non-taxation. In this context, when individuals want to exercise their fundamental freedoms in cross-border situations within the European Union, one of the elements that can easily cause double (or multiple) taxation is the concept of tax residence. Against this background, this article is aimed at analysing the obstacles caused by tax residence conflicts concerning individuals within the European Union and at outlining possible solutions to these conflicts. Two solutions are proposed. The first solution is a common definition of tax residence of individuals within the European Union that takes into account either the place from which an individual derives the major part of his income or the place in which the individual spends more than 183 days. The second solution is aimed at accelerating dispute resolution within the European Union: setting up an ad hoc joint commission that would be obliged to solve the problems caused by double or multiple tax residence within a reasonable time frame. The author points out that the latter solution is the most appropriate one in a context that wants to keep relying on the concept of tax residence as a genuine link to exercise the power to tax.

“Visible, Though Not Visible in Itself”. Transparency at the Crossroads of International Financial Regulation and International Taxation

Alessandro Turina 

This article addresses the origins and potential evolutionary perspectives of one of the most frequently recurring words in the international tax policy debate: transparency. In doing so, this study introduces a two-level analysis. At a background level, it acknowledges that transparency is – by now – a term of art in the social sciences which lends itself to some specific legal characterizations. Adopting this very conceptual framework, the article advances the hypothesis of many symmetries between the international tax and financial regulatory spheres, which, in some instances, would seem to be suggestive of a derivative nature of the currently promoted transparency agenda in international taxation from various initiatives in the field of international financial regulation: this observation applies in particular to some underlying conceptual categories, institutional frameworks and concrete implementation mechanisms. The article argues that there are, thus, ample margins, on the one hand, to promote a reconciliation between these two regulatory spheres and, on the other hand, that international financial regulation – due to its historical precedence – may serve as a good predictor of some fundamental developments in the area of international tax transparency, once again especially with regard to the development of an institutional framework and the adoption of implementation mechanisms. At the same time, the shortcomings or asymmetries of the transparency agendas promoted in the two main fields of enquiry covered by the article are addressed in the light of the contribution of interdisciplinary “transparency studies” surveyed in the background section of this contribution.
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