The Association of International Certified Professional Accountants Responds to the OECD’s Proposal to Address the Tax Challenges of a Global, Digital Economy

  • The Association is concerned that unilateral, cross-border taxation
    actions can lead to double taxation, business uncertainty and lengthy
    and expensive controversy for businesses and governments.

WASHINGTON–(BUSINESS WIRE)–The Association of International Certified Professional Accountants (the
Association) has submitted comments and recommendations to the
Organization for Economic Co-operation and Development’s (OECD) public
consultation on how to address the taxation of a global, digital economy.

In its response, the Association recommended that “a consensus-based,
equitable, and successfully durable rebalancing of multi-jurisdictional
taxing rights must have four elements:”

  • Any rules extending taxation nexus to businesses that lack a physical
    presence in a jurisdiction should be clear, measurable, predictable
    and applied consistently and neutrally across all industries and
    business models, and across all jurisdictions;
  • The arm’s-length standard, which is based on economic reality, is
    flexible enough to accommodate many of the concerns raised and
    provides a basis for addressing these concerns. Exceptions should
    consist solely of rules that are specific and limited in scope for
    attributing profits and losses to a jurisdiction. It is vital that any
    such rules are clear and administrable in their application and give
    proper regard to all value creating activities and business investment
    that takes place in other jurisdictions;
  • All participant Inclusive Framework jurisdictions must agree:

    • to adopt and fully implement the new consensus to ensure that all
      income is properly taxed only once across all applicable
      jurisdictions, and
    • to immediately repeal any previous unilateral actions, including
      temporarily enacted provisions related to digital services,
      whether currently in effect or pending; and
  • All participant Inclusive Framework jurisdictions must include
    compulsory effective and practical mechanisms in their treaties and
    other bilateral agreements to resolve any controversy over taxing
    rights, such as mandatory binding arbitration, as a minimum standard
    subject to peer review to ensure prompt resolution of any situations
    potentially resulting in double taxation.

The Association specifically cited five of its Principles
of Good Tax Policy
as the framework for its response: (1)
equity and fairness to taxpayers; (2) certainty over the amount, timing
and method of payment of a tax; (3) effective tax administration to both
governments and taxpayers; (4) unimpeded or no reduction in economic
growth and efficiency; and (5) enablement of appropriate government
revenues.

Earlier this year, the Association provided the OECD with its Taxation
of the Digitized Economy
policy paper, which calls for
“international coordination to develop a global solution to the taxation
concerns raised by digital transactions and the general digitalization
of the economy.”

About the Association of International Certified Professional
Accountants

The Association of International Certified Professional Accountants (the
Association) is the most influential body of professional accountants,
combining the strengths of the American Institute of CPAs (AICPA) and
The Chartered Institute of Management Accountants (CIMA) to power
opportunity, trust and prosperity for people, businesses and economies
worldwide. It represents 657,000 members and students across 179
countries and territories in public and management accounting and
advocates for the public interest and business sustainability on current
and emerging issues. With broad reach, rigor and resources, the
Association advances the reputation, employability and quality of CPAs,
CGMAs and accounting and finance professionals globally.

Contacts

Kathy King
202.434.9210
[email protected]

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