Oxford University Centre for Business Taxation
Summer conference 2018
Taxing the digitalised economy: Tailored change or wide-ranging reform?
The focus of the international tax community is now firmly on the digitalised economy. The immediate political concerns are two-fold: profit shifting by highly digitalised companies and the inability of existing rules to deal with the increasing importance of data and B2C cross-border sales without physical presence in the market country. But there are two larger issues at stake here.
The first is how to allocate taxing rights among countries. As the OECD recently noted “BEPS measures do not necessarily resolve the question of how rights to tax are shared between jurisdictions”, and a number of countries are dissatisfied with the current allocation.
The second concerns the type of reform required. There is an important difference in opinion here even among countries that agree on the need for reform. Some argue for reform targeted at digital companies, others for more wide-ranging reform. A third group of countries argue that there is no immediate need for further reform. The OECD Interim Report published last March noted this critical divergence in opinion among countries in the Inclusive Framework.
The current debate goes beyond how to tax highly-digitalised companies. It might lead to more fundamental change than that brought about by BEPS, and thus requires careful thought. But this is made harder by the political considerations around the debate and the political imperative for quick action. In fact, a number of countries have raced ahead with the introduction of turnover taxes, and the EU Commission has now proposed EU wide taxes of this nature too. Finding satisfactory long-term solutions in a sensitive political environment in which countries have clearly divergent interests and views is difficult. It certainly requires as much open discussion as possible.
This conference contributed to this discussion by addressing a range of questions:
- Does digitalisation create new problems for the tax system or does it simply exacerbate existing problems? Consequently, do we need reform that addresses the challenges of the digital economy or broader reform of the system?
- Is the consensus view now that the digital economy can be ring-fenced? Is there a practical way in which this can be done while avoiding excessive complexity and uncertainty?
- How do the proposed turnover taxes and digital PE stand up to legal and economic scrutiny?
- What are business’ views on these proposals?
- Can we design a sensible system for taxing in the digitalised economy following the principle that profits should be taxed where value is created?
- Will it be possible to find agreement on this issue within the OECD’s Inclusive Framework?
- As the US is central to this debate – how does it view developments in the EU? How does the recent US tax reform affect this debate?
- Would a consensus-based solution on nexus and profit allocation assuage political concerns and provide stability or will continuing pressures reopen the debate about the need further reform in the near or medium term?
Monday 2 July 2018
|09:00 - 09:30||Registration|
SESSION 1 - STATE OF PLAY
Chair: John Vella (CBT, Oxford)
|09:30 - 11:00||
Introduction - John Vella (CBT, Oxford)
The EU Commission's Proposals - Valeska Gronert (EU COmmission) Slides
The OECD Interim Report - John Peterson (OECD)
UN Perspective - Michael Lennard (UN) Slides
|11:00 - 11:30||Coffee Break|
SESSION 2 - COUNTRIES' PERSPECTIVES
Chair: Giorgia Maffini
|11:30 - 13:00||
UK - Tim Power (HM Treasury, UK)
Germany - Christoph Wicher (Federal Misitry of Finance, Germany)
Ireland - Brendan Crowley (Department of Finance, Ireland)
USA - Mindy Herzfeld (University of Florida) Slides
|13:00 - 14:00||Lunch Break|
SESSION 3 - EVALUATION OF CURRENT PROPOSALS
Chair: Richard Collier (CBT, Oxford)
|14:00 - 15:30||
Legal perspective - Richard Collier (CBT, Oxford) Slides
Economic perspective - Michael Devereux (CBT, Oxford) Slides
Business perspective - Ali Kennedy (Sophos)
Business perspective - Will Morris (PwC)
SESSION 4 - WHERE ARE WE HEADING/? WHERE SHOULD WE BE HEADING?
Chair - Michael Devereux (CBT,Oxford)
|15:30 - 17:00||
Steve Shay (Harvard University)
Andrew Ure (Google)
Saibh Young (Lloyds Banking Group)
Michael Lennard (UN)
|17:00 - 18:00||Drinks Reception|