Juan Francisco Rodríguez Rodríguez, Member of the Commitee on International Taxation at the Spanish Association of Tax Advisors has sent us an inspiring comment to Hans van den Hurk’s paper on Starbucks vs the People.
Many thanks for this contribution, dear Juan!
“Thank you, Hans. I think it is a very interesting article.
Of special interest to me is all what in this particular context has to do with and relates to “… the information society in 2013 …” (2014 already), the NGOs and (even) specialized journalists branding the participation exemption as antisocial and -last but not least- the cynicism and hypocrisy of the states with the two-pronged policies and with their continuous changing of the rules. In short: the sociological and political aspects of the whole thing, not to mention the cultural (mainly economic) differences which make countries like India and Brasil, as you mention, not accept certain OECD standards on transfer pricing.
It seems to me, though, that at the level of principles we are almost there (by the way, you seem to accept tax deferral as legitimate and as something different from tax avoidance or evasión; and I would agree with you, but don´t know what the NGO´s and journalists you mention woud say in this respect), but in real terms, in practice, … By definition, formulary apportionment is less precise, rigoruous and sophisticated than the search of the arm´s-length result, and therefore would result in less just, less fair attribution of the profits. Of course, its advantage is its simplicity.
Last note: in the ECOFIN report on tax issues dated Dec. 10, 2013 forwarded to the European Council it can be read: “On 13 March 2013, the High Level Working Party (HLWP) agreed that:
a) work on the proposal should focus on a step-by-step approach;
b) the first step should focus on those matters which are related to the tax base;
c) the issue of consolidation should be addressed in a second step when work on the base has been sufficiently advanced;
d) the proposal was not yet ready for a political discussion;
and invited the Presidency to begin the task of drafting a compromise text on that basis.” What a future!
Thank you very much again and best regards”.