In response to a call from the Organization for Economic Co-operation and Development for ideas on how to tax a global, digital economy, the Association of International Certified Professional Accountants offered a number of principles.
In its submission to the OECD, the association wrote that “a consensus-based, equitable, and successfully durable rebalancing of multi-jurisdictional taxing rights” required for key elements:
- Nexus rules for businesses that don’t have a physical presence in a jurisdiction should be “clear, measurable, predictable and applied consistently and neutrally across all industries, business models and jurisdictions.”
- The “arm’s-length standard” should be a primary basis for addressing most issues, with exceptions only for specific and limited rules regarding 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,” the association wrote.
- All the taxing jurisdictions involved should agree to adopt and implement whatever consensus emerges, “to ensure that all income is properly taxed only once across all applicable jurisdictions and to immediately repeal any previous unilateral actions.”
- All the taxing jurisdictions involved should include in their treaties and agreements meaningful mechanisms for resolving controversies over taxing rights.
The association’s reply was based in large part on ideas it lays out in its “
The association is a joint creation of the American Institute of CPAs and the Chartered Institute of Management Accountants, and represents 657,000 members and students across 179 countries and territories.
