The New Era of International Tax Law

The #Internationaltax debate has recently stolen the show to the usual crime and gossip news on newspapers and magazines. Journalists and reporters concentrated their attention on #Multinationals tax structures, turning a niche topic into a “mainstream” global case. 

The recent economic crisis, had also a strong impact on this matter, since the most powerful world’s economies, decided to massively crackdown some of the most common #Taxplanning strategies, used by the largest multinationals. 

With #Governments facing a tough spending review, with particular attention on public debts, the ability to maximise the tax revenues, became a primary necessity and a target for all key players of this debate. 

#G20 leaders and international organizations like #OECD, have worked closely and put their efforts, towards the creation of a punctual set of tax rules called #BEPS, that is meant to stop aggressive tax planning techniques, preventing multinationals from shifting profits and tackling down any relevant form of #Taxavoidance. 

BEPS, is the answer to two topical questions, the first one, is about the adequacy of the current #Internationaltaxsystem to the new standard, required by the so called new economy. The second, focused on the morality of tax, is asking whether large corporations operating #Worldwide, pay a fair share of taxes in the country where they produce revenue. Trying to stay out of a moral judgment, from a more technical point of view, market #Globalization and new digital economy, needed a modernization of the international tax rules.

In the light of this, OECD studies are welcome and BEPS stand as a pillar, to warn and remind both #Taxpayers and #Taxadvisers not to use tax structures, featured with the common 4 elements, that raise concerns of base erosion and profit shifting. 

These are, minimization of taxation in the market country, reduction of withholding tax at source, reduction of taxation of taxation at the level of the recipient and elimination of current taxation at the level of the ultimate parent. 

The BEPS set of rules, has marked a new beginning for world of #Internationaltaxation and it’s a success, in the way as it will stop the use of aggressive tax planning schemes, pursuing #Baseerosion and #Profitshifting.

On the other hand, when such a complicate matter, that is international taxation, goes mainstream, the risk of populism is just around the corner and speculation and criminalization, of certain multinationals #Taxstructures, give a distort and partial vision of the global tax environment, where the use of a loophole of a national tax system, can be considered as tax avoidance (see the US #Checkthebox rule and the lack of #CFClegislation). 

The introduction of a new fair legislation, in the way to modernise the whole international tax system, is beneficial for both multinationals and governments, though it remains unclear, if tax advisers can still advise large corporations without being caught up in the crossfire. 

Being an international tax advisor these days, is becoming even more challenging and media, in the name of feeding audience’s expectations, have too often associated tax avoidance with legitimate use of tax reliefs, causing confusion instead of correctly informing the public opinion. 

Although multinationals have taken advantage of the lack of a modern set of #Anti-avoidance rules through sophisticated tax structures, hurting sensibility and raising global indignation, after BEPS, common sense should lead each of us to moderation. On this regard, Manal S. #Corwin, spoke about sensibility and sense, as two different levels to reconcile, in a manner that produce results. 

Nevertheless, it’s an exciting time to be active part of this new chapter for the international tax law, where #Policymakers, practitioners and business leaders, can cooperate in #Reshaping adequate rules to avoid market’s distortions, in the name of a much #Fairerbusiness and #Taxenvironment, where a larger number of players can fairly compete.