PARALLEL SESSION A DETERMINING CUSTOMER STATUS AND LOCATION MAIN - PowerPoint PPT Presentation

PARALLEL SESSION A DETERMINING CUSTOMER STATUS AND LOCATION – MAIN RULE INTRODUCTION 17-18 April 2014 Tokyo, Japan Moderator - Kerstin Alvesson, Swedish Tax Agency

• Schedule for this session – Short introduction of the Guidelines to be discussed (supplies to single location entities) – A government perspective, Mr Nii Ayi Aryeetey – A business perspective, Mr Alain Cornet – Rapporteur, Mr Brendan Lynch – Discussion with the floor – Possible conclusions 2

• Guideline 3.1 – destination principle ”For consumption tax purposes internationally traded services and intangibles should be taxed according to the rules of the jurisdiction of consumption.” • Guideline 3.2 – customer location ”For the application of Guideline 3.1, for business -to- business supplies, the jurisdiction in which the customer is located has the taxing rights over internationally traded services or intangibles.” 3

• Guideline 3.2 – customer location – The main rule for business-to-business is customer location. – Appropriate proxy as it achieves the objective of neutrality. – The rule means that the jurisdiction of the customer’s permanent business presence has the taxing rights over the transaction. 4

• Guideline 3.3 – business agreement ”For the application of Guideline 3.2, the identity of the customer is normally determined by reference to the business agreement.” • The business agreement is expected to reflect the underlying supply. • The business agreement will assist – the supplier, – the customer and – the tax administrations. 5

• The business agreement consists of the elements that identify the parties to a supply and the rights and obligations with respect to that supply. They are generally based on mutual understanding. • The business agreement could be written or oral and it is not restricted to a contract. 6

Global contract Central procurement Country B Customer Call Centre Provider Call Centre Services Zero- rate Reverse charge Business Agreements Physical supplies 0-rate (calls) directly to MNE subs R/C R/C Country C Country A 7