Proposal for a Global Taxation System
– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
| No. | Problems exposed, requests, constraints and subjects | Origin | Pg | Li | Doc |
| 91 | Ap – simplified approach based on a fixed % application formula. | Pillar 1 | 15 | 37 | RBAff |
Quote : Appendix – Detailed proposal on profit allocation
Amount A (RBAag)
61. An important aspect of this approach would be to determine the level of profitability to be taken as representing “routine” profits and also determine the portion or percentage of the deemed non-routine profit that should go to the market jurisdictions, through an allocation key based on sales. The level of profitability and the split of the non-routine profits could be determined using a variety of approaches, but, as illustrated in the discussion above, a simplified approach could be to agree on a formula through the application of fixed percentages (RBAff), possibly with variances by industry.
Wanting to apply a fixed percentage to a transaction, even if it is virtual, would be tantamount to taxing imports which would only increase prices which, in a jurisdiction of modest economy, would become unbearable for the local consumer, bringing him has more poverty, with an MNE which would also end up with a production not consumed locally. We see immediately that this is not feasible and that faced with a tax system which, as proposed in the Pillar 1 document, could not be egalitarian. Taxation in a jurisdiction should be the same for everyone!
As it is written in the previous section RBAea , it would be better to go through the regulation of the DAGTVA calculation of transfer prices which would be responsible for balancing the taxes between States and MNEs according to the turnover achieved and the taxation applied, in comparison with a possible local complete production / distribution. But above all, it would allow this turnover to be recorded entity by entity, jurisdiction by jurisdiction. It would then be time to see if rebalancing is possible. But for the moment, without precise knowledge of the turnover achieved, it is impossible to go further!
The « Amount B » option is not retained in the DAGTVA tax system for many reasons détailed in these pages: RBMbr – RBAbg – RBMbe – RBAbr – RBAbd
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