International Company Taxation in the Era of Information and Communication Technologies Issues and Options for Reform
:
Anne Schäfer
:
International Company Taxation in the Era of Information and Communication Technologies Issues and Options for Reform
:
DUV Deutscher Universitäts-Verlag
:
9783835091382
:
1
:
CHF 47.50
:
:
Betriebswirtschaft
:
English
:
228
:
Wasserzeichen
:
PC/MAC/eReader/Tablet
:
PDF
Anne Schäfer presents proposals for the reform of the definition of a company's residence, the definition of the permanent establishment, the possibilities of profit allocation and the methods to avoid international double taxation. In addition, the interrelations between these issues are taken into account. Amongst others, the author argues for an extension of the definition of a permanent establishment for employees working permanently abroad and for an implementation of formula apportionment in the European Union.
Dr. Anne Schäfer promovierte bei Prof. Dr. Dr. h.c. mult. Otto H. Jacobs am Lehrstuhl für allgemeine Betriebswirtschaftslehre, Treuhandwesen und Betriebswirtschaftliche Steuerlehre II der Universität Mannheim. Sie ist in der Steuerabteilung einer internationalen Wirtschaftsprüfungsgesellscha t in Brüssel tätig.
1. Introduction
(p. 1)
1.1. Motivation
In the last few years, Information and Communication Technologies (ICT) have spread increasing speed in both private and business sectors. For example, in 2002, 64,9% of private households and 83,9% of businesses in Germany used the Internet. The ICT sector contributed close to 10% of OECD business GDP in 2001 and employed over 6% of business employment. In 2002, ICT goods represented 14% of total trade.
The implementation of ICT is leading to noticeable changes within the organisational structure of the economy, such as in the market organisation and in the internal organisation of enterprises. Market transactions carried out by enterprises can be processed either completely or in part by ICT, thus creating digital markets. It is possible to participate in these markets from all over the world and the geographic distances between the participants become rather irrelevant. With respect to the internal organisation of a company, the implementation of ICT can lead to regional decentralisation, since the process of producing goods and services makes use of production factors situated in various locations. Also, organisational decentralisation can be observed within the enterprise, as a modularisation of the value added chain takes place.
In addition, the application of ICT entails the creation of hybrid forms of enterprise co-operation, such as virtual organisations. Thus, the companies boundaries are becoming blurred. To summarise, due to the utilisation of ICT, economic activities are becoming more mobile and international. In general, international tax law is applied to the underlying organisational structures of the economy.
Given the manifold ICT-induced economic changes outlined above, the question is raised whether and to what extent these changes have an impact on the applicability of current international tax law. The main developments influencing international taxation are, above all, the increasing regional independence and mobility of companies and their production factors as well as the increasing importance of firm-specific intangible assets and services. In addition, the data required for taxation may not always be available.
When applying international company tax law to the underlying economic structure, the tax law in general has to be consistent with the economic structure in question in order to arrive at a reasonable taxation. The tax system is considered to be reasonable when it meets various normative criteria for optimal taxation. For example, the tax system must provide efficiency and neutrality. equity between different taxpayers and between different jurisdictions as well as feasibility in practice.
However, since the use of ICT has an impact on the organisational structures of the economy, the current tax system may not always be in line with these modified business structures. Contrary to the often mobile, geographically independent and international activities of companies, the tax system is intended to be applied rather to traditional economic activities. Thus, the economic assumptions underlying tax law can differ from the real economic circumstances.For example, tax law is in part based on the assumption of immobile business activities, such as in the case of the definition of a permanent establishment or the place of effective management.
Foreword
8
Acknowledgements
10
Overview of Contents
12
Table of Contents
14
List of Figures
20
List of Tables
20
Abbreviations
22
1. Introduction
25
1.1. Motivation
25
1.2. Aim of the Thesis and Subject Under Investigation
28
1.3. Approach and Organisation of tlie Thesis
31
2. Changes to Economic Structures Through ICT
33
2.1. Defining ICT
33
2.2. Theories on the Organisational Structure of Firms
34
2.3. The Impact of ICT on the Main Factors Influencing Doing Business Abroad
38
2.4. ICT- Induced Changes in the Organisational Structures of Companies and Markets
42
2.5. Summary
54
3. Fundamental Concepts of International Taxation
55
3.1. The Tax Framework for International Company Taxation
55
3.2. Jurisdiction to Tax
57
3.3. Allocation of Profits
61
3.4. Methods to Avoid Double Taxation
68
4. International Tax Planning in the Era of ICT
71
4.1. Theory of the International Tax Planning of Companies
71
4.2. The Impact of ICT on International Tax Planning
76
4.3. Implications for the Allocation of the International Tax Base Between Different Jurisdictions
97
4.4. Implications for a Systematic Analysis
101
5. Normative Criteria for Optimal Taxation
102
5.1. Equity
102
5.2. Efficiency and Neutrality
105
5.3. Feasibility
109
6. Application of International Tax Law to the Changed Organisational Structures
111
6.1. Taxation in the Residence Country: Localisation of a Company's Residence According to the Place of Management
111
6.2. Tax Attributes in the Source Country: Defining a Permanent Establishment
119
6.3. Profit Allocation
137
6.4. Taxation According to the Source Principle or the Residence Principle
150
7. Reforming International Taxation
156
7.1. Reforming the Criteria to Determine a Company's Residence
156
7.2. A Reform of the Permanent Establishment Definition
165
7.3. Reforming the Allocation of the Taxable Base
181
7.4. Source Principle Versus Residence Principle
213
8. Summary
215
References
221
Laws, Jurisprudence, Directives and Other Documents
251
