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NOB Reaction - OECD Public Consultation Addressing the Tax Challenges of the Digitalisation of the Economy

06 maart 2019

On 13 February 2019 the OECD launched a public internet consultation with a view to devising measures for addressing the challenges that the increasingly digitalising economy. The Dutch Association of Tax Advisers has submitted a response to this consultation.

In summary, the Dutch Association of Tax Advisers is of the opinion that:

  • In any solution safeguards should be ensured to avoid double taxation and that companies are taxed on their (overall) profits only. To minimize the risk of double taxation, a global approach, such as safe haven provisions, multilateral APAs or a one-stop shop could be considered as safeguards for taxpayers’ rights.
  • Any proposal should be carefully evaluated and also considered in view of non-digitalized businesses and the impact on such sectors.
  • Rules for attribution of functions should be clear and easy to apply in order to avoid tax disputes.
  • Should a global profit split or global apportionment be chosen as a mechanism to achieve the desired result, such a mechanism should take into account losses incurred, especially since heavily digitalized businesses are able to sustain multi-year losses  while still being (considered) a viable business.
  • The minimum taxation rules potentially set aside long established principles of international taxation. Such rules also hit at the core of jurisdiction’s sovereignty to set their own tax rates and determine the taxable basis. Within the EU, such rules would likely have to be tied to a principle purpose test in order for such rules to be compatible with EU law.
  • It is remarkable that the options mentioned in Chapter 2 of the Consultation are limited to three alternatives only. In particular the Association wonders why the option of a creditable withholding tax is not further considered, as a withholding tax could cater for the intended allocation of taxing rights to market jurisdictions, as expressed in the Consultation, and would fit better in the existing international taxation framework (and as such it would be less prone to the risk of causing double taxation).

Dit commentaar is tot stand gebracht door de Commissie Wetsvoorstellen, bestaande uit de NOB-leden drs. R.A. van der Jagt (voorzitter), prof. mr. J.W. Bellingwout, prof. mr. dr. A.C.P. Bobeldijk, mw. mr. P.C. van den Brink, drs. M.J.A.M. van Gijlswijk, de heer E.P. Hageman LLM, prof. dr. E.J.W. Heithuis, mw. prof. dr. S.J.C. Hemels, prof. dr. P. Kavelaars, prof. mr. dr. Q.W.J.C.H. Kok, drs. C. Overduin, drs. W.H. Peters, mr. M.H.C. Ruijschop, mr. E.B. van der Stok, mr. E.A. Visser, drs. M.M.G.A. Voets, mw. mr. B.E.M. den Boer (secretaris wetsuitvoering) en mr. P.A. Anthoni (secretaris wetgeving) met medewerking van de leden van de digitale economie en prof. dr. mr. Daniël Smit.