13.10.2018 International Tax Law between efficiency, equity and development aid Short presentation EATLP Conference Istanbul 2014 Matthias Valta Institute.

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Presentation transcript:

13.10.2018 International Tax Law between efficiency, equity and development aid Short presentation EATLP Conference Istanbul 2014 Matthias Valta Institute for Finance and Tax Law, Dr. Matthias Valta

Basic principles of taxation Overview Basic principles of taxation Legal theory / legal philosophy / economics Reception of John Rawls’ Theory of Justice Theory on tax/state competition and development First concretion within system of source vs. residence taxation Second concretion within distribution norms of DTCs Institute für Finance and Tax law, Dr. Matthias Valta

1. Basic principles: equity Tax justification: Global benefit principle: taxes as consideration for the states overall infrastructure and service package Democratic aspect: No taxation without representation No representation without taxation  Fiscal autonomy: different tax rates in source/residence country should affect overall burden Institute für Finance and Tax law, Dr. Matthias Valta

1. Basic principles: efficiency Benefit neutrality: State of Residence R 30 % tax burden A B High level of infrastructure & state services 30 % tax burden Low level of infrastructure & state services 20 % tax burden Institute für Finance and Tax law, Dr. Matthias Valta

1. Basic principles: Conclusio Every country, whose infrastructure has been used to generate income, should have a share of taxation The shares should be autonomous to each other, so that the tax burden in each country affects the overall tax burden  Democratic accountability and feedback  Allows for benefit neutrality, esp. important for developing countries Institute für Finance and Tax law, Dr. Matthias Valta

2. The system of source vs. residence Detailed territorial attribution through source taxation Taxation of worldwide income in the state of residence as typical source In principle: Taxing rights should be shared between source state and state of Residence Source state taxation might be omitted for compliance costs, especially in symmetric relations with similar tax- infrastructure ratio Institute für Finance and Tax law, Dr. Matthias Valta

2. The system of source vs. residence Method Vertical equity Horizontal equity Efficiency Distribution Autonomy Production Credit + (source limited) -̶ Credit w/ tax sparing (matching ) (+) Exemption Division of tax base Deduction from tax base Institute für Finance and Tax law, Dr. Matthias Valta

3. Distribution norms in DTCs Comparison of DTC models, empirical survey of DTC policy, partially also comparison of national law. Analysis under global benefits principle: Does distribution match contributions of the states infrastructures to the income creation? Triangular cases: do some attributions to residence states also take care of third source states interests? Tresholds to source taxation: efficient (net) taxation Relevance to treaty interpretation (e.g. PE definition, TP) Balance of payments analysis Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN MA TH VE Residence c. / Exporter 12 6S 120S 6 183 3/6 3 183S 9 8S Distributive rules on construction sites Art. 5 (3) 3-12: months 120/183: days S = Supervisory activities included Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN MA TH VE Residence c. / Exporter 12 6S 120S 6 183 3/6 3 183S 9 8S Distributive rules on construction sites Art. 5 (3) 3-12: months 120/183: days S = Supervisory activities included Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN MA TH VE Residence c. / Exporter 12 6S 120S 6 183 3/6 3 183S 9 8S Distributive rules on construction sites Art. 5 (3) 3-12: months 120/183: days S = Supervisory activities included Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN MA TH VE Residence c. / Exporter 12 6S 120S 6 183 3/6 3 183S 9 8S Distributive rules on construction sites Art. 5 (3) 3-12: months 120/183: days S = Supervisory activities included Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN Residence c. / Exporter 12 6S 120S 6 183S Importer US DE JP BR CN IN Exporter   237 295 337 71 79 468 165 307 48 38 191 87 81 7 251 116 82 77 Distributive rules on construction sites Art. 5 (3) Balance of payments data UN services trade base Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN Residence c. / Exporter 12 6S 120S 6 183S Importer US DE JP BR CN IN Exporter   237 295 337 71 79 468 165 307 48 38 191 87 81 7 251 116 82 77 Distributive rules on construction sites Art. 5 (3) Balance of payments data UN services trade base Institute für Finance and Tax law, Dr. Matthias Valta

Source country / Importer 3. Distribution in DTCs Source country / Importer US DE JP BR CN IN Residence c. / Exporter 12 6S 120S 6 183S Importer US DE JP BR CN IN Exporter 209 291 259 57 52 342 85 318 42 43 238 60 65 10 188 125 48 Distributive rules on construction sites Art. 5 (3) Balance of payments data UN services trade base Institute für Finance and Tax law, Dr. Matthias Valta

Heidelberg University Institute for Finance and Tax Law Dr. Matthias Valta Heidelberg University Institute for Finance and Tax Law valta (at) uni-heidelberg.de