August 2018  
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Issue No. 3 - 2018 of the World Tax Journal is now available online.

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Number 3 - 2018 contains the following:

The Arm’s Length Standard and Tax Justice: Reflections on the Present and the Future of Transfer Pricing

Aitor Navarro

The aim of this contribution is to analyse the arm’s length standard from a tax justice perspective so as to determine the proper breadth of the fiction it imposes. To that end, an interpretative solution is proposed to minimize negative outcomes derived from the alleged shortcomings of the mentioned standard that mainly arise due to the fact that MNEs do not operate in markets as independent parties do. Although the proposal may seem rather theoretical or abstract, practical implications may be derived from it in diverse matters within transfer pricing, e.g. on the recognition of profits derived from active and passive association, on how synergistic gains should be split, on the scope of transactional adjustments and on the fostering of two-sided analysis. In fact, the proposal may serve to provide a sound and strong theoretical basis to encourage the proposals discussed within the BEPS Project.

VAT and the Sharing Economy

Giorgio Beretta

The sharing economy, underpinned by digital platforms like Airbnb and Uber, which pair individuals’ needs and wants, from accommodation to rides, is on the ascent. These new business models, where capital and labour are provided by several dispersed individuals rather than by a single centralized entity, defy the operational structure of comparable traditional activities. In the sharing economy, in fact, the personal and the professional spheres blur, and selfish motivations mingle with altruistic aims, while transactions span the whole market-to-gift spectrum. Against this background, in which the classification of individuals and transactions is less straightforward, the article intends to assess the practical feasibility of specific EU VAT notions such as “taxable persons” and “taxable transactions”, as interpreted by the ECJ and the VAT doctrine. In addition, the research seeks to test these concepts against a framework of selected tax principles.

Confronting Conflicts of Qualification in Tax Treaty Law: The Principle of Common Interpretation and the New Approach Revisited

Christoph Pleil and Stefan Schwibinger

The principle of common interpretation and the new approach to article 23 A/B of the OECD Model Tax Convention are two concepts in tax treaty interpretation to avoid double taxation and double non-taxation resulting from conflicts of qualification. Against the backdrop of the introduction of similarly working approaches, namely the linking rules of BEPS Action 2, it seems appropriate to re-evaluate the doctrinal foundation and practical applicability of both concepts. Since the effectiveness of the principle of common interpretation and the new approach depends on their international recognition, the analysis is based on a comparative study including six jurisdictions, representing common and civil law: Australia, Belgium, Canada, Germany, the United Kingdom and the United States. In the first part of this article, the principle of common interpretation is examined, while the second part assesses the new approach. The third part concludes and gives proposals for the development of a joint methodological understanding of both concepts.

The Convergence and Divergence between China’s Implementation and OECD/G20 BEPS Minimum Standards

Diheng Xu

In the post-BEPS era, China, as a non-OECD member country but a member of the G20, has a positive attitude towards the implementation of the OECD/G20 BEPS Action Plan, especially in the area of treaty abuse and dispute resolution. However, the implementation presents divergence with the OECD/G20 BEPS minimum standard of transfer pricing. China has embedded its own rationale on profit allocation derived from location specific advantages, including location savings and market premiums in the Chinese market, into its newly released rules. This article introduces convergence and divergence between China’s implementation measures and the BEPS minimum standards. It focuses on the analysis of the divergence by analysing China’s rationale of advocating the method on profit allocation, but also points out related problems. This article concludes by suggesting that China maintain its own claims and advocating for the OECD to take into account this divergence in order to achieve its goal of combating tax avoidance via global cooperation.

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