|Congress||IFA 2019 London, United Kingdom|
|Date||8 - 12 september 2019|
|Location||London, United Kingdom|
Interest deductibility: the implementation of BEPS Action 4
James Gadwood (USA) Paul Morton (United Kingdom)
Oktavia Weidmann (Switzerland) Sung Hwang (USA)
Chair: Osman Mollagee (South Africa)
As financial and funding instruments evolve, there is an ongoing need for international tax constructs to be refined and sometimes even revised. International taxation is familiar with addressing the tax implications of different legal systems encountering each other, in some cases giving rise to classification or qualification issues that treaties seek to resolve. The features and implications of Sharia law – a non-secular legal system – and its interaction with other legal systems is a less familiar example of the interaction of legal systems giving rise to specific and practical legal and tax issues for transactions. But sometimes the differences between legal systems are not as profound as they may seem.
This seminar will consider some of the major Sharia finance instruments, and the practical complications that typically arise when applying traditional international tax principles. The panel will share observations on some domestic measures that have been considered in some jurisdictions, on some complications arising in cross-border financing arrangements, and on how BEPS Actions might impact the treatment of these instruments. The panel will conduct its inquiry with reference to particular kinds of financial instruments and their financial characteristics in relation to non-Sharia forms of financing to achieve equivalent or similar financing objectives.
Chair: Tony Pagone (Australia)
The focus of this topic is to look at recent developments directed at dealing with perceived disjunction between the form in which transactions are entered into for tax consequences and the commercial and economic substance which they seek to achieve.
There is a pervasive trend for taxation to be concerned with the substance of transactions and arrangements. But, what substance: “economic substance” which is a common form of expression in transfer pricing, or a more thorough understanding of “legal substance” as an evidence-based conclusion about the nature of transaction and other legal relations that may or may not be consistent with how they are described formally. Amongst the issues to be considered are recent developments in BEPS Action 2 on “Hybridity” and equivalent developments in the European Union expressed in ATAD I and ATAD II.
This seminar is not about hybrids or purposive tax avoidance as such, although both are relevant. However, it will consider the role played by legal systems, including conflicts of laws, in determining the classification and features of transactions and arrangements to which tax law applies, in the absence of a legal system common to all taxing jurisdictions.
Chair: Jennie Rimmer (United Kingdom)
This session will give delegates oversight of current and future developments and challenges in relation to indirect tax matters for financial services businesses, specifically those in insurance, banking, and asset management. Whilst there will inevitably be some discussion on Brexit and the indirect tax implications for the UK and non-UK businesses, this will be proportionate and is not intended to be the dominant topic or to displace the more specific and thorough discussion of these topics in other seminars. Topics will cover practical aspects of calculating, managing and reporting indirect taxes, managing and communicating indirect tax risk, any notable areas of challenge by tax authorities for indirect tax, and policy updates.
Chair: Diana Wollman (USA)
”Hybrid” instruments and transactions have been identified by the international tax community as a “bad thing”. They are the lightning rod for a variety of criticisms that reflect competing tax interests of countries in the absence of a common legal or tax system. It is commonly said that they erode the tax base of at least one of the countries involved, encourage otherwise-inefficient economic behaviour, are unfairly exploited by sophisticated taxpayers with the economic means to do so, and impair the integrity of tax systems that taxpayers authorities otherwise believe are fair and ought to be respected.
The reason that “hybridity” exists is that countries’ rules differ. If all the countries had the same rules for Characterising instruments and transactions, hybridity would not exist. So, a coordinated common approach is presently perceived as the solution to getting rid of this problem. With that in mind, the OECD BEPS project developed recommended rules that all countries could adopt and thus put an end to hybridity. The EU is responding in a similar direction with ATAD I and ATAD II. However, countries and the EU are responding by issuing rules that follow these recommendations only in part and then vary from them in part.
This seminar will address what is motivating these variations and what their practical consequences are. It will also discuss particular examples of transactions that may be uncontroversial within a particular legal and tax system but give rise to challenging effects when different perceptions of the same events, in the nature of a classification or qualification conflict familiar to tax treaties, encounter and possibly collide with each other.
Chair: James Anderson (United Kingdom)
As an increasing number of private enterprises boldly go where no company has gone before, this seminar will examine some of the current and upcoming tax issues arising out of space exploration and space as a jurisdiction in which commercial, value-creating events take place mostly without direct human intervention “in space”.
Classical mythology has helped format the solar system for two millennia, and here it will guide our panel in discussing recent and future areas of technical development, including: (i) competing conceptual frameworks for the ownership and taxation of resources exploited by future missions; (ii) the taxation of satellite communications; and (iii) the attribution of income to off-world permanent establishments, in other words the ultimate BEPS displacement of income to a truly other world. Panelists will be invited to provide insights into the attitudes and approaches of the regions in which they practice and to discuss the possibilities for space exploration and exploitation to lead to greater global cooperation - or dispute.
Composed of international taxation experts, the panel will strive to offer thought-provoking insights into taxing the final frontier and events with terrestrial origins and destinations that transit through space at the direction and under the control of those terrestrial enterprises. The panel will explore whether, in terms of international tax interests and tests of tax jurisdiction, there are distinctions without differences or distinctions that launch differences from the common ways of establishing and describing tax jurisdiction.
Chair: Stef van Weeghel (Netherlands)
The IFA/OECD Seminar is one of the permanent plenary sessions at IFA Congresses, resulting from a fruitful and long-standing relationship between IFA and the OECD, and has always brought interesting discussions and updates on the most significant work developed by the OECD in the last 12 months, as well as comments on trends and future developments. The challenges arising from the digitalisation of the economy and the ensuing broader discussion regarding the international allocation of taxing rights will be important themes of this seminar.
Chair: Timothy McDonald (USA)
The tax environment continues to evolve from primarily a technical discussion between the taxpayers, advisors and government tax authorities directly interested in those taxpayers, to a much more robust and expansive conversation that increasingly involves influence exerted directly or collectively by, and claims made by, multiple governments to tax the same income. This is all in the context of concerns expressed in political forums and by non-governmental organisations called “civil society”, as well as traditional NGO’s, activist substantial shareholders, other financiers of multinational corporations, and the general public.
Considerations associated with corporate reputation now more significant than ever and influence taxpayer behaviour. Increasing public discussion regarding corporations paying “their fair share” creates complicated demands on how to satisfy all stakeholders’ demands in credible, administrable, transparent and accountable ways, while at the same time respecting the reasonable proprietary interests of businesses.
What is the role of tax transparency and enhanced cooperation in achieving, predictability, sustainability and a general sense of fairness? Will a public disclosure registry of CbCR reporting create more public confidence or confusion regarding “fairness”? Will tax authorities be able to make constructive and productive use of new sources of information, and broadly-based information sharing, for effective tax administration? Will these initiatives be sufficient in restoring public confidence or is the current broad discussion regarding the taxation of the digitised economy including its enhanced anti-abuse rules and reconsideration of jurisdictional taxation rights (source vs. resident) a harbinger of further developments considered necessary to achieve predictability, a perception of “fairness”, and thereby a sustainable corporate tax environment?
This session will canvass these issues with the benefit of panel members drawn from a number of these relevant constituencies, tackling these difficult questions with reference to actual experience in the multinational corporate business environment
Chair: Mukesh Butani (India)
This session will consider increasingly urgent questions about the interaction of public international law, notably the law of treaties, and international taxation’s allocation of taxing rights via tax treaties. Certainty of double taxation conventions can be undermined by initiatives from states to enact laws which have the effect of over-riding treaties, either directly or by way of the clarification or declaration of perceptions of what treaties “mean” or are “meant to do”. To what extent such actions are consistent with the objects and purposes of treaties according to public law, and more specifically the origins and objectives of tax treaties, is an increasingly important question. Equally, the relationship between the purposes and effects of treaties, and domestic anti-avoidance provisions in the BEPS era, has emerged as a challenge for MNE taxpayers and also tax authorities.
The panel will analyse historical perspectives and in particular important conventional and customary public international law considerations that may seem exotic to many versed only in taxation including the divergent principles of “lex specialis” and “lex posterior derogate legi priori”. These profoundly influence states’ jurisdiction to tax and are likely to figure prominently, even if silently in the background, of important and urgent treaty debates about how business activities undertaken digitally should be taxed.
Chair: Chloe Burnett (Australia)
The Recent Developments panel will explore the latest developments in international tax. Recent trends in transfer pricing will cause us to debate whether we have reached “Arm’s Length 2.0”? The panel will also explore structuring case studies where one country’s tax rule depends on a second country’s tax rule, an increasingly common occurrence in this post-BEPS world. Developments in PEs, treaties, disclosure, and transparency will also be debated and, as ever, late breaking news will be reported.
Chair: Luc De Broe (Belgium)
The IFA/EU seminar aims to offer a comprehensive overview of the most important direct tax and tax policy developments concerning the European Union since the last IFA Congress, with a focus on selected issues of current interest and an outlook on forthcoming developments.
After an overview of the tax policy developments, the panel will discuss the recent case law on state aid in direct tax matters as well as the recent CJEU judgments on abuse of Directives and the interpretation of the “beneficial ownership”-concept.
Thereafter, the panel will address the 2018 Directive on mandatory disclosure by fiscal intermediaries (DAC 6). The composition of the panel will provide a comprehensive and hands-on analysis and will be composed of representatives of the EU Commission and delegates of the judiciary, industry and academia.
Chair: Melissa Geiger (United Kingdom)
The Brexit debate reminds us of the intimate connection between tax and trade in a world without homogeneous legal or tax systems but, nevertheless, pervasive free trading if not systematic “free trade”. In this way, Brexit takes tax specialists back, in real time, to the modern origins of international tax rules and treaties to relieve trade frictions induced by multiple taxation of the same income and income earners.
This session will start with a brief overview of where we are in the political process concerning the reconfiguration of the United Kingdom’s economic relations with Europe and, necessarily, also the rest of the world. We will have a detailed discussion on the impact of Brexit on trade and the evolution of both the UK and the EU tax systems in relation, and often in reaction, to trade. Finally, we will discuss what this means for multinational companies both in the tax space and in relation to global employee mobility.
We will be joined by panel contributors from government, business and the professions in what is sure to be a lively and, at this stage unpredictable but undoubtedly timely, debate whatever the immediate state of Brexit is when we meet in London.
Can we credibly argue that we know what the future will look like? How will disruptive technologies impact taxation and the work of tax professionals around the world? YIN experts in the field may become the tax leaders of tomorrow and will help shape the international tax landscape as it changes rapidly in the years ahead. What challenges do they see for 2029?
Join the debate in the Young IFA Network and discuss how you think young tax professionals can face this ten-year challenge.
Wednesday 11 September 15.30 - 17.00 hours
As part of a new project on tax morale, the OECD has recently reanalysed the results of a survey of business perceptions on tax certainty, to identify the constraints and concerns they face in paying in taxes around the world. This new report, to be launched at this session, has identified some of the factors that may impact tax morale and attitudes towards compliance among businesses, and how they differ in different regions.
In addition, in recent years, business has set out a range of principles and voluntary reporting standards on tax policy and compliance, bringing corporate tax affairs into the realm of Corporate Social Responsibility, and creating an emphasis by some on businesses role as responsible taxpayers . The impact of these latter measures is difficult to track, especially away from corporate headquarters. To gauge that impact, the OECD is undertaking a further survey of tax officials to test how the behaviour of business matches up to their own principles.
This session bring together a range of actors involved in the creation and implementation of such principles and standards, to discuss the pros and cons of each, and where and how changes have occurred as a result. It will also discuss how such principles and standards are viewed from the tax authorities, as well as the overlaps with the tax certainty agenda.
Format – Davos style moderated discussion
Chair – Grace Perez-Navarro – Deputy Director CTPA
Presentation – OECD – to present progress on research
• Alan McLean
o Deputy Chair Business at OECD Committee on Taxation and Fiscal Policy/Executive Vice President Taxation and Corporate Structure Royal Dutch Shell
• Marlene Parker
o Chief Tax Counsel, Legislation, Treaties, and International Tax Matters - Tax Administration Jamaica
• Professor Christiana HJI Panayi
o Professor in Tax Law Queen Mary University of London
• Laurence Jaton
Head of Group Tax, Engie
Questions for discussion to include:
• Why have we seen the growth of tax and business principles in the last few years, and what has the impact of such principles been?
• Can such principles replace/reduce the need for legislation, and in what conditions?
• What are the challenges for MNEs in consistently applying such principles across all the jurisdictions they operate in – how can these be addressed?
• How can we track the impact of these principles – what evidence can we expect to see?
• Why do companies choose to voluntarily adopt such principles/standards – do they indicate tax morale, or something else?
• What factors drive the tax morale of companies – and how can we measure them?
The event is open to all delegates attending the IFA 2019 Congress in London – see https://www.ifa.nl/congresses/ifa-2019-london for further details, including on how to register.
For media enquiries please contact [email protected].
All participants are encouraged to join the IFA President’s Reception at the conclusion of the session.
Join top international experts at the IBFD Dialogues on International Taxation Seminar as they discuss international tax fairness and the taxing rights of the source state. The event takes place on Monday 9 September from 16.00 -18.00 hours.
IBFD’s Dialogues on International Taxation Seminar at IFA London will focus on key specific issues in international taxation, in order to give a quality indication of trends in the legal interpretation and policy of cross-border taxation. Top international experts will discuss the practical implications of international tax fairness issues connected with the taxing powers of the source State, giving you a unique glimpse into what truly matters in international taxation. Addressing the current tax issues, the IBFD dialogues, as always, will look at these problems from a different perspective, focusing on future developments. The IBFD dialogues are therefore a perfect in-depth supplement to the IFA seminars for a full immersion into technical issues combined with an overall view of tax sovereignty in the era of global tax coordination.
Also this year, in 2019, the IBFD's Dialogues will serve as an excellent platform to showcase the IBFD Global Tax Treaty Commentaries (GTTC), which is the most authoritative source for analysis and commentary of tax treaty practices across the globe. This peer-reviewed, cutting-edge publication is authored by world-class academics and tax professionals and is fully integrated on the IBFD Tax Research Platform.
To find out more about the programme and to register, please go the IBFD website: link.ibfd.org/2GY454h