Nexus, new forms of taxes and double taxation.

The international tax rules take different approaches in the OECD and UN Models to nexus rules for when a source country has the right to tax activity that gives rise to sales or economic activity in the source country. In addition, developed and developing countries have taken steps to adopt non-income tax approaches to taxing remote digital activity that culminates in sales in the source country. The African Tax Administrators Forum has published a model digital service tax, a first of its kind. The Inclusive Framework’s Pillar 1 proposal would modestly revise the allocation of source taxation rights in favor of the source country in exchange for forgoing certain digital services taxes. The tensions between these different approaches to source taxation of business activity also lays bare the frustration that some governments have with income tax regimes being unable to adjust to provide for effective taxation at source of income from the global economy.

The panel will discuss this fractured regime and assess from the perspective of stakeholders, including developing and developed countries and MNE businesses, where the international tax regime stands and where it may go. This topic links with Main Subject 1.

Panel Chair: Stephen Shay (United States) 

Mobility, high net worth individuals: latest tax developments

This topic will deal with selected challenges in the international tax arena affecting the taxation of individuals when they hold investments in different countries and also move between tax jurisdictions. It is not intended for this topic to deal with the tax implications for business coming about as a result of increased global mobility of its workforce. Instead, the seminar is intended to address tax developments affecting the taxation of individuals. The seminar will approach the topic by looking at trends relating to the movement of high net worth individuals and examine some case studies relating to such movements, including moving from a relatively tax benign jurisdiction to a more regulated country. The case studies will draw upon the tax treatment of hybrid entities, including trust and foundations, residential properties as well as the tax implications of holding family business assets and looking at the transfer of wealth between generations following the move of family members. In addition, the appropriate compliance and reporting requirements, associated in part with the automatic exchange of information between countries will be covered.

The session will also look at some of the difficulties when jurisdictions seek to tax wealth via capital gains tax particularly where there are international moves and capital gains tax exit charges are applied together with the associated potential double taxation pitfalls.  Furthermore, there will be a wider discussion in terms of taxation on wealth and how we see the trends in both OECD and non-OECD countries playing out and the associated practical difficulties. 

Panel Chair: James Whitaker (South Africa)

The role of bilateral investment treaties in tax related disputes

The session’s focus will not be on the tax effects of BITs but on exploring the practical consequences for BITs where cross-border tax disputes come about.

The session can further explore whether tax disputes could conceivably be dealt with under, or avoided because of, BITs (specifically under those agreements’ “investor-state dispute settlement” process), including whether those agreements provide lessons for how international tax disputes may be dealt with.

BIT tax-related disputes are an emerging area dealt with by a small group of experts. The seminar may be more of an educational experience for the broad range of attendees at IFA Congresses as opposed to a tax technical seminar dealing with, say, interpretive disputes about international tax topics well-known to most attendees, such as what beneficial ownership means.

Panel Chair: Liselott Kana (Chile)

Taxation issues for the oil & gas industry and the energy transition

The seminar will focus on the income tax and indirect tax aspects pertaining to the oil and gas industry rather than on hard rock minerals.

In addition, there are important aspects of sustainable energy transition that affect the fiscal frameworks for both sectors (e.g. the transition to a carbon-neutral economy), which could be dealt with in future. Significant new discoveries of natural gas and oil have been made in several African countries in the past decade, with more being reported regularly. Compared to hard rock minerals, it is certainly the more dynamic sector viewed from an African regional perspective.
The panel could review the significant attention regulators have given to fiscal reform or the design of regimes for this sector, especially over the past decade. These reforms, in varying degrees, take account of industry features, the decommissioning/dismantling of wells/mines, the benefaction of local communities, state participation, the goals of transitioning to sustainable sources of energy, addressing tax leakages, local development goals of source countries, etc.
VAT should also be addressed as part of this topic, while scope also exists to deal with transfer pricing aspects of natural resource pricing. The UN Tax Committee has a dedicated sub-committee working on transfer pricing aspects for the extractives industry.

Like the BIT seminar, this seminar may be more of an educational experience for the broad range of attendees at IFA Congresses who have no or very little experience in dealing with this specialised sector.

Representatives from the UN sub-committees on transfer pricing and on extractive industries taxation issues as well as industry organisations such as the IGF, which do a lot of international tax work in this field, will be represented on the panel.

Panel Chair: Stig Sollund (Norway)

IFA/OECD

The seminar, of significant importance, focuses on the latest developments in International taxation. The Panel will bring together experts from Government, academia, business, and tax practitioners to discuss major International tax initiatives and developments, with a particular emphasis on OECD work in this area.

Panel Chair: Armando Lara Yaffar (Mexico)

IFA/Africa - Doing business in Africa: transfer pricing and other cross-border tax issues

The seminar aims to identify and discuss regional tax uniqueness and whether international tax and transfer pricing frameworks acknowledge and accommodate such uniqueness (e.g., withholding taxes not common elsewhere in the world).
The discussion will be split between transfer pricing uniqueness (and challenges) in the developing world and other international tax-related matters.
The discussion is intended to deal with more than income tax but also VAT, given the heavy reliance in Africa on consumption taxes due to its ease of administration and enforceability. The same goes for withholding taxes that are heavily relied on as distinct sources of revenue in several African countries. Withholding at source can be more than a mere collection mechanism for some countries, and may in effect be a separate type of tax, especially when charged on active service income.

 The topic will also be of interest insofar as it is bound to address topics that will apply to other developing countries outside of Africa in their search to develop coherent tax policies for taxing foreign investment and business income and simplify tax administration. The enforcement and practical capabilities of such states then become relevant, especially the reliance on VAT and withholding taxes, with questions to be asked as to the practical obstacles faced by these countries to administer an income tax (and transfer pricing-related matters especially) on a non-withholding basis.

Panel Chair: Belema Obuoforibo (IBFD/Netherlands)

The relation of tax treaties with domestic law

Should treaties continue to be used only to allocate taxing rights, or should such instruments not only provide the right to tax but equally the power to tax in the absence of domestic legislation to that effect? Is this an alternative to minimum taxation proposals and the prevention of double non-taxation?

There is a school of thought that does not see income tax treaties as “allocating tax rights” but as merely imposing limits on the income tax jurisdiction of source states. Therefore, at the most basic level there is a lack of global consensus on the purpose of model-based income tax treaties.

This is compounded by confusion about the motives for entering into such treaties (e.g. to stimulate cross-border investment) being seen as the purpose of such a treaty.

The question essentially relates to policy and the purpose of treaties. Is the purpose of allocating taxing rights limited to source state tax erosion, or is it to eliminate actual double taxation? If the latter, then, arguably, it would not run contrary to the purpose of treaties not to be applied where double taxation does not come about. The effect of article 31(1) of the VCLT may be debated here.

Only applying treaties where double taxation is involved though, is controversial and creates potential conflicts with the pacta sunt servanda rule and with tax sovereignty. There are examples, however, where judiciaries and legislatures have sought to apply treaties in this manner, be it through enacting treaty overrides (in the case of the legislature) or in the guise of statutory interpretation (in the case of the judiciary).

Panel Chair: Shefali Goradia (India)

Recent developments in international taxation

This permanent seminar at all IFA Congresses, brings the latest and most important issues that impact international taxation around the world. The main focus of this seminar will be on recent judicial decisions on key international tax topics such as tax treaties, transfer pricing and domestic tax rules with cross-border implications. The final agenda for the seminar is normally decided close to the Congress date to make sure that it is as current as possible.

Panel Chair: Prof Jonathan Schwarz (UK)

Judicial approaches to tax treaty interpretation

This seminar builds on the forthcoming Global IFA volume devoted to “Tax Treaty Interpretation in light of the Vienna Convention on the Law of Treaties” (ed.s Danon/Maisto/Martin-Jimenez) and will focus on:
- the most recent practical trends in tax treaty interpretation and
- their consistency with the principles set out in the Vienna Convention on the Law of Treaties (VCLT).

Within this framework the following topics will be explored:
- Tax treaty interpretation in the broader public international law environment – The role of the principle of systemic integration (art. 31(3)(c) VCLT),  by Robert Danon
- Interpretation of tax treaty terms under  art. 31 VCLT: static versus evolutionary interpretation, by Daniel Gutmann
-  The role and limits of  object and purpose (art. 31 VCLT) in tax treaty interpretation, by Adolfo Martin Jimenez
- The role and status of the OECD Commentaries and other materials under the VCLT , by Johann Hattingh
- Role and status of  foreign court decisions in tax treaty interpretation, by Guglielmo Maisto

In addition, there will be a few online interventions by tax treaty experts.

Panel Chair: Prof Kees van Raad (Netherlands)

IFA/EU

The IFA/EU seminar will highlight the most recent and pressing developments in international tax law from the specific angle of EU law.

Panel Chair: Prof Georg Kofler (Austria)

Tax Certainty in Uncertain Times: A Regional Perspective and Practical Insights on 21st Century Tax Controversy

Given that Subject 2 at the Cape Town Congress will focus on practical approaches to international tax dispute prevention and resolution, the YIN Seminar will be a complimentary session exploring how tax dispute prevention and resolution mechanisms are working in practice in the regions and share practical insights into how taxpayers can prepare for tax controversy.

Tax and Technology: Innovative Use Cases from Around the Globe

This 50-minute seminar will explore the integration of advanced technologies such as AI, generative AI, blockchain, and big data in tax management. It will feature global perspectives from Europe, Asia-Pacific, the Americas, and Africa, highlighting innovative applications in tax compliance, tax risk management, tax administration, and tax advisory. These innovative use cases will illustrate how these technologies have enhanced efficiency, transparency, and accuracy in tax systems and processes. The seminar will conclude with a panel discussion on future trends, challenges, and ethical considerations.