Monday, October 29, 2018
The American Institute of CPAs and the Chartered Institute of Management Accountants have jointly issued a policy paper calling for a multilateral approach to solving the tax challenges posed by the digital economy.
The paper, published by their joint body, the Association of International Certified Professional Accountants, is intended to "educate, enlighten and stimulate the discussion" about the taxation of the digitalized economy.
"International tax issues and tax policies are most effective and efficient when tax systems operate within an internationally agreed-upon platform and approach," the paper states.
The Association notes in the paper that: "The taxation of digital transactions in a cross-border context presents several challenges to the concepts of the right to tax and the allocation of profits between countries. International bodies have devoted considerable effort to define these challenges and develop an international consensus on the best approach to address them. Meanwhile, many individual countries over the past few years have unilaterally proposed their own solutions."
It is argued in the paper that all parties to these discussions should develop policies and platforms "that are reasonable for business compliance and tax administration."
"Any solution should provide mechanisms to resolve controversies, eliminate the double taxation of value or income, and adhere to existing global standards and tax treaties to the extent possible," the Association said.
While the paper does not take a position on any specific tax proposal or existing law, it does reference various proposals now being developed by international organizations, as well as those that have been implemented, or have been proposed, by individual countries. These include: the two March 2018 European Commission draft directives that address taxation of the digital economy in Europe, including the proposal for a temporary three percent tax on gross receipts from digital activity with the European Union; the OECD's attempts to achieve a global consensus on digital tax reforms; and the work of the United Nation's committee on taxation towards developing recommendations in this area.
The Association's policy paper is being distributed globally to policymakers and multinational organizations.