Taxing Cross-Border Services : Current Worldwide Practices and the Need for Change.

Intro -- IBFD Doctoral Series -- Title Page -- Copyright Page -- Table of Contents -- Acknowledgements -- List of Abbreviations -- Short Form References -- Additional Notes -- Chapter 1 Introduction -- 1.1. Research objectives and research questions -- 1.1.1. The scope of the research -- 1.2. Thesis outline and methodology -- Chapter 2 The Development of Trade in Services -- 2.1. What is meant by trade in services? -- 2.2. The importance of GATS and its services categorizations -- 2.2.1. The modes of services delivery specified by the GATS -- 2.2.2. Trade liberalization under the GATS -- 2.3. The tradability of services -- 2.4. General issues in assessing the scale of trade in services -- 2.5. The recording of cross-border trade in services -- 2.5.1. Trade in services via affiliates (GATS Mode 3) -- 2.6. Evidence for growth in trade in services -- 2.6.1. Inferring growth in services trade by reference to growth in trade in goods -- 2.6.2. The state of knowledge of the scale of trade in services at the times the Models were being developed -- 2.6.3. More recent trends in trade in services -- 2.6.4. The scale of trade in services via affiliates compared to exports of services -- 2.7. The importance of services trade for developing countries -- 2.8. Conclusions -- Chapter 3 The Theoretical Justification for the Use of the Source Principle in the Taxation of International Services -- 3.1. Introduction -- 3.2. Source and residence -- 3.3. The underlying rationale for the use of the source principle -- 3.4. Benefits provided by the host state as a justification for source taxation -- 3.4.1. Ability to pay and the benefits principle in combination -- 3.5. The benefits principle as justification for taxing services provided by non-residents.

3.6. Should the host state automatically have the right to tax profits arising from the use of imported factors of production? -- 3.6.1. When is a host state justified in using the source principle to tax income from services? -- 3.7. Provision of a market as justification for source-state taxation -- 3.7.1. Use of the benefits principle where no obvious use of host-state factors of production: Case law developments at state level in the United States -- 3.8. Base erosion as a justification for the taxation of services income of non-residents -- 3.9. The source principle and cross-border services: Developing country issues -- 3.10. Conclusions -- Chapter 4 A History of the Treatment of Cross-Border Enterprise Services in the Model Tax Conventions -- 4.1. The origins of the OECD Model Tax Convention and its treatment of income from services -- 4.1.1. The 1928 Models and the omission of references to services -- 4.1.2. Post-Second World War developments - Services in the London and Mexico Drafts -- 4.1.3. Services in the UK-US Treaty of 16 April 1945 -- 4.1.4. The development of the 1963 Draft OECD Model -- 4.1.5. The publication of the 1963 Draft OECD Model -- 4.1.6. Subsequent changes to taxation of services in the OECD Model -- 4.2. The UN Model -- 4.2.1. The standard of nexus: The definition of PE -- 4.2.2. Should profits from international services be treated as business profits? -- 4.2.3. Distinction between independent personal services and enterprise services -- 4.2.4. Supervisory services in connection with building sites, construction or assembly projects -- 4.2.5. The germination of the UN services PE concept -- 4.2.6. The distinction between royalties and technical service fees -- 4.2.7. The treatment of royalties in the published UN Model -- 4.3. Developments concerning services in the UN Model following its publication.

4.3.1. Ongoing problems with the treatment of royalties and technical service fees -- 4.3.2. The scale of adoption of the UN Model provisions regarding services up to 1997 -- 4.3.3. The 2001 and 2011 versions of the UN Model -- 4.4. Conclusions -- Chapter 5 Domestic Law on the Taxation of Inbound Services -- 5.1. Objective and rationale of the chapter -- 5.2. The comparative legal research method -- 5.3. The problem stated -- 5.4. The states studied in depth -- 5.5. The sources used -- 5.6. The questions researched -- 5.6.1. The definition of services for tax purposes -- 5.6.2. How is the source of income from inbound services determined under domestic law? -- 5.6.3. Is there a PE threshold that applies explicitly to services activities? -- 5.6.4. Services provided by way of subcontractors -- 5.6.5. Withholding taxes on income from services -- 5.6.6. Grossing-up clauses -- 5.7. The distinction between payments for services and payments for royalties -- 5.7.1. Intellectual property brought into existence by the provision of services -- 5.7.2. Mixed contracts -- 5.8. The distinction between independent personal services and other business activities -- 5.9. Enforcement -- 5.10. Congruence between domestic law provisions on services and treaty policy -- 5.11. Conclusions -- Chapter 6 Survey of Treaty Practices -- 6.1. Income from enterprise services in double tax treaties -- 6.2. Survey method -- 6.3. The use of a deemed services PE -- 6.4. The treatment of independent personal services -- 6.5. Services PEs and article 14 taken together -- 6.5.1. State practices: Services PE and article 14 taken together -- 6.6. Taxation of services income on the gross basis -- 6.6.1. Particular provisions relating to technical and other service fees -- 6.7. Country groupings -- 6.7.1. The European Union -- 6.7.2. The OECD members -- 6.7.3. The BRIC countries.

6.7.4. Practices of the 20 leading economies -- 6.8. Discussion -- Chapter 7 The Application of the Fixed Place of Business Threshold to Non-Resident Service Providers -- 7.1. Is a physical location threshold appropriate in determining jurisdiction to tax over income from services? -- 7.1.1. Was the fixed place of business concept ever intended to apply to large-scale services trade? -- 7.1.2. Fixed place of business: Necessary for enforcement purposes? -- 7.2. The application of the fixed place of business concept to services trades in the OECD Model -- 7.2.1. "At the disposal of": An implied temporal threshold? -- 7.2.2. "At the disposal of": The necessary range of business functions to be performed before a "fixed place of business" PE can arise -- 7.2.3. "At the disposal of": The 2012 Discussion Draft -- 7.2.4. Fixed place of business: The implied temporal test -- 7.2.5. Treaty interpretations of article 5 with respect to service enterprises -- 7.3. Premises of affiliate as fixed place of business -- 7.3.1. Geographic and commercial coherence: Application to cross-border services -- 7.3.2. Conclusions on the application for the fixed place of business concept to cross-border services -- Chapter 8 The Services PE -- 8.1. The deemed services PE in the UN Model -- 8.1.1. The temporal threshold in article 14 of the UN Model -- 8.2. The deemed services PE provisions in the 2008 Commentary on the OECD Model -- 8.3. The deemed services PE in the US-Canada DTT -- 8.4. Interpreting a deemed services PE -- 8.4.1. The foreign subsidiary as PE of the parent or other affiliate -- 8.4.2. Services provided to third parties or provided for the benefit of the enterprise itself? -- 8.4.3. Do seconded employees create a services PE for the seconding company? -- 8.4.4. Interpretation of temporal thresholds - Problems of measurement.

8.4.5. Temporal thresholds: The effect of different approaches to measurement -- 8.4.6. Temporal thresholds: Who is providing the services? -- 8.4.7. The interpretation and the implications of the "same or connected project" requirement -- 8.4.8. Case law interpretation of "same or connected" in the context of services -- 8.4.9. Theoretical shortcomings of the "same or connected project" rule -- 8.4.10. Income-based thresholds -- 8.5. Conclusions -- Chapter 9 Further Fundamental Issues in the Treatment of Services in the Models -- 9.1. Source rules for services income -- 9.1.1. How is the place of performance to be determined? -- 9.1.2. Place of performance: Services provided remotely -- 9.1.3. The utilization principle as an alternative to place of performance -- 9.1.4. Conclusions on the source principle for services -- 9.2. The classification of income from services for treaty purposes -- 9.2.1. The 2011 UN proposals for a separate article dealing with technical service fees -- 9.2.2. Uncertainty in the classification of income from services -- 9.2.3. Brazilian treaty interpretations in treaties without specific provisions for services income -- 9.2.4. The distinction between service fees and royalties -- 9.2.5. Technical databases: Services or the use of IP? -- 9.3. WHT and non-resident service providers -- 9.3.1. Problems caused by the imposition of WHT -- 9.3.2. Problems created by the use of grossing-up clauses -- 9.3.3. The case for WHT -- 9.4. Conclusions -- Chapter 10 Conclusions -- 10.1. The need for equity in the allocation of taxing rights over income from services -- 10.2. Strengths of the current system -- 10.3. The need to deal with enterprise services explicitly in the Models -- 10.3.1. The OECD Model as a tool for reducing the variety of treatments in DDTs.

10.4. The unsuitability of the fixed place of business concept to cross-border service provision.

This book contains a worldwide survey of double tax treaties with respect to cross-border services and critically analyses current guidance in the Model Tax Conventions.

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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2024. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.