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Die vorliegende wissenschaftliche Arbeit befasst sich mit dem Thema des innergemeinschaftlichen Versandhandels und den damit einhergehenden Änderungen im Rahmen der Mehrwertsteuersystemrichtlinie. Die Neuerungen sind aufgrund der Covid-19 Pandemie auf 01.07.2021 verschoben worden und sind seitdem von den Mitgliedsstaaten umzusetzen. In einem ersten Schritt wird die rechtgeschichtliche Entwicklung auf Ebene der Europäischen Union und die maßgeblichen Rechtsakte beleuchtet bis zur Einführung der E-Commerce Richtlinie 2017. In dem Zusammenhang wird auf die Systematik der Lieferung eingegangen, wobei ein Fokus auf die Sonderbestimmungen im Rahmen der innergemeinschaftlichen Fernverkäufe gelegt wird. Im Anschluss wird vergleichend die Rechtslage vor 01.07.2021 und die neue Rechtslage beleuchtet. Dabei werden Sonderbestimmungen, wie die neu geschaffene Kleinstunternehmerregelung genauso behandelt wie die maßgeblichen Bestimmungen zur Rechnungsausstellung sowie zur Entstehung der Steuerschuld. Um in die vorliegende Arbeit die praktische Komponente einfließen zu lassen wird im Rahmen eines Exkurses der steuerliche Rückversand behandelt und einige praktische Beispiele dargestellt. This paper deals with the topic of intra-community mail order and the associated changes within the framework of the VAT system directive. The changes have been postponed to 01.07.2021 due to the Covid-19 pandemic and have to be implemented by the member states since then. In a first step the history of law on the European Union scale and the relevant legal acts until the introduction of the e-commerce directive in 2017 are presented. In this context the systematics of the supply is considered with focus on the special provisions in the context of intra-community distance sales. Subsequently the legal situation before 01.07.2021 will be compared to the new legal situation. Special topics as the newly established micro-entrepreneur regulation are outlined in the same way as the relevant provisions on the issuing of invoices and the incurrence of tax liability. An excursus to the return shipment for tax purposes incorporate a practical component and some practical examples are presented in the paper. Abweichender Titel laut Übersetzung der Verfasserin/des Verfassers Masterarbeit Wien, FH Campus Wien 2022

This study was conducted to determine about the debit notes is a taxable and tariffs 10% ( ten percent ) on export of taxable service if it is reviewed by taxable supplies, and to determine the treatment of VAT on Debit Note reviewed by the concept of destination principle and to determine whether it is acceptable in tax regulation of Indonesia if It’s issued a Debit Note for collecting of company income and to estimate how much penalties arise. This study used qualitative methods with qualitative descriptive analysis. The object of research is based on data available at the company that is secondary data. Data collection techniques are Library research . The results of data processing that the Debit Note is an taxable of VAT. In terms of destination Principle Debit Note is taxable to VAT 0 % (Zero Percent) for the shipping charge, the Minimum Order Quantity (MOQ) charge and cancel orders charge / penalty fees. Debit Note Billing mechanism is allowed in tax regulation as long as there is a document whose position equivalent to tax invoice for canceled order charge/penalty fees, but charge for shipping and the Minimum Order Quantity (MOQ) charge don’t allow in the tax regulation because it is non-compliance of the material terms of the tax invoice. As a result of the Debit Note that issued raised the sanctions of Article 14 paragraph (2) of general provisions and taxation procedures for 2 % of the tax base. Based on the suggested better in making commercial document to charge must analyze aspects of taxation in order to prevent tax penalties in this case to issue Debit Note need to create a document that is equivalent to a Tax Invoice because mechanism of the Debit Note is taxable of VAT.

Despite the reputation of VAT as a convenient tool for accumulation of significant amounts of tax revenues to the budgets with relatively low administrative costs, the broad use of new information and communication technologies and the spread of e-commerce throughout the world considerably affects this tax’s efficiency, increases the risk of non-taxation or double taxation of operations, made in the framework of international trade, and violates the principle of fairness between goods and services, traded (provided) offline and online.In this regard, this paper outlines the main list of issues, that arise when using VAT to e-commerce transactions (especially - international ones), and describes main approaches, that are planned to apply or are already applied by the leading countries in the context of economical development and e-commerce.In general, international organizations (OECD, EU) have confirmed that e-commerce transactions are subject to VAT on a destination principle, and all sellers must be registered for VAT purposes in the countries, where their clients are located. However, there are still problems of international co-operation and coordination, related to the VAT application to international transactions.For less developed countries, emerging economies, and countries, that are planning to become EU member-states (such as Ukraine), not only the problems of applying VAT to e-commerce transactions, which are not solved in the most developed countries, must be addressed, but also those, that impede their economic and social development.Based on the results of the analysis, the paper offers recommendations on improving the legislation on e-commerce taxation in Ukraine and general recommendations that should contribute to the development of this type of trade in the country.

Against the backdrop of a digitalized economy and a multitude of digital business models, policymakers from around the world are seeking consensus concerning an appropriate allocation of taxing rights. While there is widespread acceptance that consumption taxes should be levied in market jurisdictions, this is not yet the case in corporate income taxation. In an effort to counteract base erosion and profit shifting and more generally, reduce tax avoidance opportunities, the international community is now working to advance the ‘destination principle’ in a broader context. The notion of taxing profit and consumption in market jurisdictions can further equity among states. However, taxation in market jurisdictions can be afflicted with considerable tax compliance and enforcement difficulties, which can lead to inequitable results among taxpayers. To effectively tax digital business models in market jurisdictions, innovative approaches in substantive tax law and tax enforcement are needed. As the authors argue in this paper, proxies can be useful regulatory tools to ensure administrability of a destination-based tax system. In this context, however, policymakers must strike a balance between administrability and equity. The common system of value added tax (VAT) in the European Union (EU) has utilized various proxies and structural enforcement mechanisms to simplify tax compliance and enforcement in the digital context for years. In the authors’ view, they enhance effectiveness of the tax system without renouncing tax equity and have set an example for novel regulatory approaches currently under debate for corporate income taxation.

Financial support from the Catalan Government Science Network (2009SGR and XREPP) and the Spanish Ministry of Education and Science Research Project (ECO2009-10003) is gratefully acknowledged. This paper identifies conditions under which, starting from any tax-distorting equilibrium, destination- and origin-based indirect tax-harmonizing reforms are potentially Pareto improving in the presence of global public goods. The first condition (unrequited transfers between governments) requires that transfers are designed in such a way that the marginal valuations of the global public goods are equalized, whereas the second (conditional revenue changes) requires that the change in global tax revenues, as a consequence of tax harmonization, is consistent with the under/over-provision of global public goods relative to the (modified) Samuelson rule. Under these conditions, tax harmonization results in redistributing the gains from a reduction in global deadweight loss and any changes in global tax revenues according to the Pareto principle. And this is the case independently of the tax principle in place (destination or origin).

Diese Arbeit beschäftigt sich mit den umsatzsteuerlichen Neuerungen im grenzüberschreitenden E-Commerce. Die Europäische Kommission hat gesetzliche Änderungen in zwei Phasen vorgeschlagen. Nach ersten Änderungen im Bereich der Telekommunikations-, Rundfunk- und Fernsehdienstleistungen sowie der elektronisch erbrachten sonstigen Leistungen im Jahr 2015 bringt nun das zweite Maßnahmenpaket des E-Commerce-Pakets der Europäischen Kommission einige weitere Neuerungen in der Umsatzsteuer. Ein Teil dieser Neuerungen ist bereits 2020 in Kraft getreten, der größere Teil wurde erst 2021 wirksam. Ursprünglich war zur Umsetzung der Vorschriften der 1.1.2021 vorgesehen. Diese Frist wurde jedoch aufgrund der Maßnahmen zur Eindämmung der Covid-19-Pandemie um sechs Monate auf 1.7.2021 verschoben. Das EU-Mehrwertsteuersystem wird historisch beleuchtet und es wird ein Ausblick auf ein endgültiges Mehrwertsteuersystem gegeben. Danach erfolgt ein Überblick über die Einführung von MOSS, wobei auch die Begriffe der elektronisch erbrachten Dienstleistungen, Telekommunikations-, Rundfunk- und Fernsehdienstleistungen erklärt werden. Im Anschluss werden die Neuerungen aufgrund des zweiten Maßnahmenpakets erläutert. Durch das E-Commerce-Paket soll die Besteuerung im Bestimmungsland gewährleistet werden. Außerdem ist die Europäische Kommission seit Jahren bestrebt, die gesetzlichen Regelungen für den Versandhandel und den sonstigen Leistungen im B2C-Bereich innerhalb der EU und aus Drittländern zu erleichtern. Die Ausweitung des One-Stop-Shops soll zu Vereinfachungen führen. This paper deals with the VAT innovations in cross-border e-commerce. The European Commission has proposed legal changes in two phases. After initial changes in the area of telecommunications, radio and television services and other electronically supplied services in 2015, the second package of measures of the European Commission's e-commerce package now brings some further innovations in VAT. Part of these innovations already came into force in 2020, the larger part only became effective in 2021. Originally, 1st January 2021 was planned for the implementation of the regulations. However, this deadline was postponed by six months to 1st July 2021 due to the measures to contain the Covid 19 pandemic. The EU VAT system is examined historically and an outlook on a definitive VAT system is given. This is followed by an overview of the introduction of MOSS, including an explanation of the concepts of electronically supplied services, telecommunications, broadcasting and television services. Subsequently, the innovations resulting from the second package of measures are explained. The e-commerce package is intended to ensure taxation in the country of destination. In addition, the European Commission has been striving for years to simplify the legal regulations for mail order and other B2C services within the EU and from third countries. The extension of the one-stop shop is intended to lead to simplifications. Abweichender Titel laut Übersetzung der Verfasserin/des Verfassers Masterarbeit Wien, FH Campus Wien 2021

This study was supported by the Economic and Social Research Council (ES/S00713X/1, Kotsogiannis) and the Spanish Ministry of Science, Innovation and Universities (RTI2018-095799-B-I00, Lopez-Garcia). The usual caveat applies. Altres ajuts: acords transformatius de la UAB Altres ajuts: ESRC/ES/S00713X/1 This paper argues that Pareto improvements based on harmonizing tax reforms expressed in terms of the divergence between actual and optimal tax structures and over/under provision of public goods require the use of 'pseudo-optimal' taxes instead of optimal ones. 'Pseudo-optimal' taxes are defined as those obtained using the optimal tax formulas but evaluated at any arbitrary initial tax structure. Within this context the paper reconfirms existing results showing that tax harmonization emerges as a strong policy instrument in achieving a potential Pareto-improvement.

Digital transactions rapidly dominate the trading system in the current era by providing quick and real-time fulfillment of life needs, including logistical needs, availability of public services, entertainment, and others. Moreover, the high number of digital transactions show prospects of potential tax extensification, mainly through the collection of Value Added Tax (VAT). Besides paying attention to the concept of consumption-based taxation in its collection, taxes on digital transactions can also increase state revenue as a source of income. The government needs to implement a policy strategy to optimize digital transactions' taxation through the VAT policy on Trade Through Electronic System. In a trade transaction, the consumer is the party that uses the goods and/or services obtained. Consumption of goods and/or services is subject to VAT. Regardless of the products' origin, VAT will be imposed because the goods and/or services are consumed within the customs area, including those imported from outside the customs area. This research discusses taxing digital transactions, a policy strategy for tax authorities through VAT of Trade Through Electronic System. This study aims to analyze the government's implementation strategy and compare VAT policy, especially on foreign e-commerce transactions of Digital Goods and Services in ASEAN countries. The qualitative approach is used as a research method, using an in-depth interview and literature study as data collection techniques. According to the equality principle, the policy formulation is based on the government's attempt to collect VAT on goods and/or services from overseas as one of the principles of tax collection and neutrality as VAT's main characteristics. Taxing digital transactions is also following the destination principle and is based on the principle of revenue productivity in taxation. Furthermore, the government's implementation strategy is to conduct dissemination and organize a decent implementation framework, both from the technology and business point of view.

Research on the practice of collecting Value Added Tax (VAT /PPN ) on service exports carried out in Indonesia uses two conflicting principles, namely the destination principle and the origin principle. The application of these two principles can eliminate the essence of VAT neutrality and lead to double taxation and unintended double taxation. According to the OECD, the most appropriate principle to apply in VAT collection is the destination principle. This normative research was conducted in order to obtain answers regarding the influence of the OECD Guidelines on International VAT/GST on VAT regulation on service exports in Indonesia. The results of the study conclude that although the OECD Guidelines on International VAT/GST is a type of soft law that is not binding on Indonesia, indirectly, by declaring itself to implement the BEPS action plan comprehensively, the government has voluntarily demonstrated its commitment to implementing the OECD guidelines which relating to VAT, including the International VAT/GST Guidelines. In other words, the destination principle is the only principle that should be used in collecting VAT on service exports in Indonesia .

The starting points in international taxation, as used by countries around the world to establish and divide tax jurisdiction and as the basis for the charge to tax income, embed an idiosyncrasy of analytic indistinctness. The residence and source principles are geographically geared in the same direction, towards the supply side of income and the country of origin. At the same time, however, the source principle is also geographically geared in the opposite direction, towards the demand side and the country of destination. This creates a world of smoke and mirrors, where a veil of apparent universal consensus on the principles of international taxation disguises deep underlying antagonisms between countries and regions when it comes to dividing entitlements to tax international income. In a time of isolationism and unilateralism, such divides are problematic. A political solution to the problem of how to geographically distribute tax base among countries is not (or not yet) available for the e-profits of tech giants, for example, or for dividing taxing rights on portfolio investors’ capital income between richer and poorer countries. The author believes that it would make a difference if we were to cease our troubled ‘residence-versus-source thinking’ and instead to direct the debate to what it is really about: tensions in the international tax regime as a result of a growing geographical divergence between the supply side and the demand side of income creation.

I leverage a Pakistani tax reform that cuts the tax rate on the supply chains of five major industries of the country from 15% to 0% to cast light on the extent of, and mechanisms driving, VAT noncompliance in a representative emerging economy. I find that firms overclaim refunds by 22% and underreport domestic B2C sales by 43.5%. Together, this implies an evasion rate of 77% in the treated industries and 38% in the population. I explore the role of three mechanisms (1) the destination principle, (2) the last-mile problem, and (3) invoice mills in driving this noncompliance.

We construct a perfectly competitive model of two symmetric countries producing tradable commodities and a public consumption good. Destination- or origin-based taxes are levied on the consumption of the tradable goods. In both countries, a fixed wage leads to involuntary unemployment. We derive the Nash equilibrium consumption taxes under the two taxation principles with endogenous world prices, and compare them to (i) the cooperative rates, and (ii) the rates when world prices are fixed. We demonstrate that with endogenous world prices, the induced terms-of-trade effects cancel out under the destination principle, but they prevail under the origin principle of taxation. Nash equilibrium destination-based taxes are inefficiently low when the exporting sector in each country is non-labour-intensive. The Nash equilibrium origin-based taxes can be either higher or lower than the corresponding cooperative rates.

In a small open economy composed of unionised international Cournot-Nash duopolies, a self-interested government has unilateral incentives to set higher specific domestic excise duties under the destination principle when the typical foreign firm is dominant and the import-competing sector is small. Excise taxes may emerge in political equilibrium when domestic firms and unions lobby for protection and the government is unable to use alternative protective policies because of international agreements. In so far as the government is prepared to exchange tax revenues for political contributions, under some conditions the excise tax rate will be higher than the one chosen without lobbying.

The VAT treatment of transactions between head office and branch varies depending on the territorial spread of the taxpayer. If the head office and the branch are within the borders of one tax jurisdiction, their transactions are nontaxable since they are conducted within a single tax-payer. The nontaxable treatment of cross-border provision of services between the head office and the branch and vice versa is based on the same argument. However, if one of the entities becomes a member of the local VAT group, the single taxpayer becomes 'divided' and the service is subject to taxation. Cross-border supply of goods, on the other hand, is always taxable as required by the destination principle. A detailed analysis of the described tax treatment is the subject of this article.

This paper seeks to create an insight into the intendments of the Nigerian Value Added Tax Act on taxation of supplies by non-residents to Nigerian residents, and the ideal approaches for amelioration of the controversies. Analyses of laws and judicial decisions in the paper find that the Destination Principle and the Reverse Charge Mechanism endorsed by Nigerian courts which have been severely criticized in legal opinion circles as alien to Nigerian law are actually contained in the law, albeit impliedly. Thus the problem of Value Added Tax on imported services in Nigeria seems to be more of poor appreciation of the law, than of the contents of the law. Hence, awareness creation on the law, revival of the criminal provisions, executive measures, and contractual innovations are the main recommendations to ameliorate the controversies.

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Rapid growth in e-commerce has altered the ability of jurisdictions to enforce commodity taxes on a destination basis. This results in different effective tax rates depending on the way in which goods and services are purchased and the characteristics of both the products and the sellers. We discuss the arguments for the destination principle as the appropriate place-of-taxation rule for consumption taxation of cross-border trade. We analyze various recent reforms to the value-added tax in the European Union in response to e-commerce. We then examine various policy options in the USA—maintaining the status quo, changing nexus rules, states adopting information reporting, and national reforms that require firms to remit taxes regardless of physical presence—and relate them to the recent European reforms. We conclude based on our analysis and the recent European Union experience that reforms at the national level appear to be the important next step to enforcing commodity taxes at destination in the USA.

In a two-country duopoly model, this paper compares destination- and origin-based commodity taxes adjusted to tariff reductions so that the world price and foreign welfare remain unaltered. We first find that this tariff-tax reform reduces domestic welfare under the destination principle while the opposite holds under the origin principle. Then, it is shown that this ranking is reversed if exports are taxed. In short, which is preferable between destination and origin taxes depends on the tax principle and which between imports and exports are taxed.

The idea of Border Carbon Adjustment (BCA), which makes it possible to transform the standard tax on carbon emissions from production (origin principle) to a tax system imposed at the point of consumption (destination principle), has received a considerable amount of attention from academia and policymakers. In this paper, we go back to the source of environmental destination-based taxation and generalize the results of Markusen (Journal of International Economics, 5, 15–29, 1975) for optimal tax and tariff by extending domestic environmental policy on both goods featuring positive carbon intensities. Following Jakob et al. (Environmental and Resource Economics, 56(1), 47–72, 2013) we remove the strategic term from the optimal tariff and deal with the so-called optimal carbon tariff, targeting primarily environmental externality. Further, we develop a handy approximation for optimal tax and optimal carbon tariff structure in a multiple good setting. Such trade taxation is, however, likely to face further legal obstacles, which may hinder its implementation. This motivates us to adjust the results accordingly and to include refunds for low-carbon investments in a ‘dirty’ country granted proportionally to the difference in carbon intensities between trade partners. This new scheme, known as Progressive Optimal Technology-based Border Carbon Adjustment (POT BCA), mitigates several legal problems and increases political acceptance compared to the ‘standard’ BCA. It can also be seen as advantageous from the economic point of view: it mimics the performance of the optimal carbon tariff while aiming to decrease foreign carbon intensity over the long term.

This article provides a summary of the European Commission's report ‘Implementing the destination principle to intra-EU B2B supplies of goods’, produced by Ernst & Young in July 2015. The report was commissioned in order to analyse five alternative VAT taxation models for the B2B supply of goods in the EU that had been identified by the Commission as being potential solutions to two inherent problems associated with the current EU VAT system: high VAT compliance costs associated with cross-border trade for businesses, and VAT fraud levels. In this article, the key features of each of the five options are discussed, together with how they will be implemented in practice in both straight forward B2B cross-border transactions and also in relation to more complex B2B cross-border supply chains. This article provides an overview of the potential impact of each option on business VAT compliance costs, VAT fraud and the wider economy. In addition, it also considers member state tax authority administration costs...

In late 2015, the European Commission announced a monumental U-turn on Value Added Tax rates policy. After decades of advocating the benefits of harmonization of VAT rates across the EU Member States, and after many failed legislative attempts at achieving it, the Commission declared its intention to do the opposite, namely to disharmonize VAT rates across Europe. The announcement was followed by a VAT Action Plan, and a public consultation on the reform of VAT rates, which, under the guise of modernization and consistency with the destination principle, presented two options for reform, both of which would give Member States further freedom and flexibility in the application of reduced rates. Against this background, the aim of this article is not to restate the benefits of VAT rate harmonization, but to assess whether the EU has legislative competence to approve disharmonizing VAT legislation. The article concludes that Article 113 TFEU could not be used as a legal basis for a Directive aimed at disharmonizing VAT rates, and that any such Directive, would lack legal basis and, consequently, be unlawful under the EU constitutional principle of conferral of powers.

A main reason for founding the European Union was to remove internal trade obstacles and to establish a Single Market within its borders. Along with the increasing integration of international markets, an ever-increasing diversification of firms in tandem with the development of multinational enterprises is observable. Legislative authorities of the European Union and its member states are faced with the challenge of ensuring that their corporate tax systems keep pace with this economic transformation of companies and markets. Hence, in order to meet the requirements of an integrated European market, in 2001 the European Commission proposed a switch from Separate Accounting to Formula Apportionment as the leading corporate income taxation system in the European Union. Basically, corporate income of multinational enterprises can be taxed according to these two different principles. At present Separate Accounting is applied at the international level, while some countries like the U.S., Canada, Germany and Switzerland use Formula Apportionment at the state or federal level. Under the current system of Separate Accounting each subsidiary of a multinational enterprise is treated as a separate entity subject to national tax law. For this reason multinationals have to value their intra-firm trade using internal transfer prices, which should meet an external standard of comparison, so-called arm’s length prices. Because of the very nature of internal trade with firm-specific tangibles and intangibles evaluating adequate transfer prices proved difficult. Consequently, Separate Accounting was identified as one reason for manipulations in favor of profit shifting for tax saving purposes. That is why the European Commission regards the consolidation of profits including cross-border loss offset for calculating a multinational company’s tax base as a more suitable approach in the economic union and advocates the Common Consolidated Corporate Tax Base (CCCTB). To allocate the consolidated tax base to the taxing countries a splitting mechanism is needed. Hence, the CCCTB proposal includes a system of Formula Apportionment. A formula apportions a share of the overall tax base depending on the multinational enterprise’s geographical economic activity in the respective country. The European Commission favors a common three-factor apportionment formula containing assets, labor and sales to represent the production and consumption side. The European Commission’s proposal has initiated a continuing politico-economic discussion about the efficiency and distributional consequences of the transition to Formula Apportionment in Europe. This doctoral thesis evaluates particular issues within this debate by presenting three theoretical articles to answer specific research questions. The articles are based on the methodological concept of a Nash tax competition model under perfect symmetry, where countries choose their corporate tax rates non-cooperatively. The non-cooperative behavior of one country may impose fiscal externalities on other countries and thereby renders the tax policy inefficient. This dissertation focuses on the derivation, explanation and interpretation of the resulting inefficiencies under Separate Accounting and Formula Apportionment. For this reason it contributes three papers to the theoretical literature of optimal tax policies in a non-cooperative equilibrium of tax rates. The work aims to compare and discuss the alternative policy options. The first article pertains to the public debate about the right taxation principle to apply in Europe. The article investigates the effect of fiscal equalization on the efficiency properties of corporate income tax rates chosen under the taxation principles of Separate Accounting and Formula Apportionment. Fiscal equalization ensures efficiency if the marginal transfer just reflects the fiscal and pecuniary externalities of tax rates. In contrast to previous studies, tax base equalization (Representative Tax System) does not satisfy this condition, but combining tax revenue and private income equalization does, regardless of which taxation principle is implemented. This finding implies that it does not matter whether MNEs are taxed according to Separate Accounting or Formula Apportionment if there is equalization of national income (i.e. private income plus tax revenues). Under Formula Apportionment, tax base equalization is superior to tax revenue equalization if the wage income externality is sufficiently large. Even though the European Union does not have an explicit equalization system, a part of the Unions’s budget is financed by contributions from the member states. The implied income redistribution would indeed not be enough to ensure efficiency of corporate income taxation, since the budget is not an equalization system in the sense of our analysis. But the very existence of income redistribution in Europe might indicate that reforming the member states’ contributions to the budget in a suitable way may politically be easier to achieve than replacing an implemented corporate tax system. The second article refers to the sales factor in the proposed three-factor formula under Formula Apportionment. The incorporation of a sales factor in the formula as well as the assignment of sales at the place of origin or destination are hotly debated issues. The CCCTB Working Group suggested in 2007 the inclusion of sales following the destination principle but also mentioned that “...most member states experts that would support the inclusion of sales as a factor would prefer sales measured ‘at origin’ ”. With regard to the most recent proposal by the European Commission in 2011, the European Parliament advocated that the sales weight be lowered to 10%. The Committee of the Internal Market and Consumer Protection even called for the removal of the sales factor. In contrast, from Canada and the United States, the opposite development has been observed, namely the increasing importance of the sales factor. Taking a two-country Nash tax competition model with a sales-only formula and market power, we investigate (i) whether the transition from Separate Accounting to Formula Apportionment mitigates tax competition and improves welfare and (ii) whether tax competition is weakest when sales are measured with the origin principle. The driving force is a negative consumption externality that hampers the positive formula externality present for both the origin and destination principle. The third paper investigates the Commission’s recommendation to implement a transition process to Formula Apportionment. During the change Formula Apportionment should be optional for multinational enterprises. Recent empirical literature proves that profit consolidation reduces multinational enterprises’ involuntary costs for complying with different tax laws, but increases discretionary compliance costs incurred by tax planning activities. That is why the third article considers a two-country model with multinationals that are heterogeneous with respect to their involuntary compliance costs. Additionally, multinational enterprises using the Formula Apportionment system face higher discretionary compliance costs due to restricted tax base manipulation opportunities. Hence, multinational enterprises would prefer to be taxed under Formula Apportionment if and only if under Separate Accounting the involuntary compliance costs exceed the tax advantage due to better profit shifting possibilities. We show that a non-negative threshold value of involuntary compliance costs exists such that multinationals with costs above this level choose Formula Apportionment. We prove in a symmetric setting that starting from a pure Separate Accounting system with national revenue maximization, a transition from Separate Accounting to an optional Formula Apportionment increases the non-cooperative tax rates and national revenues for both countries ending up with the results of pure Formula Apportionment. This is because with identical tax rates the multinational enterprise cannot benefit from the better profit shifting opportunities under Separate Accounting but saves involuntary compliance costs. In our analysis the optional system of tax base consolidation promises an efficiency enhancement for the member countries. Hence, we deliver an additional argument in support of an international agreement on the CCCTB proposal., Einer der Hauptgründe für die Entstehung der Europäischen Union (EU) war das Ziel, interne Handelshemmnisse zu beseitigen, um innerhalb der Unionsgrenzen einen gemeinsamen Markt zu etablieren. Parallel zur zunehmenden Integration der internationalen Märkte ist eine vermehrte Diversifikation von Unternehmen zu beobachten, welche durch die Entstehung multinationaler Konzerne begleitet wird. Für die Gesetzgeber der EU und ihrer Mitgliedsstaaten bedeutet dies, ihre Körperschaftsteuersysteme laufend an diesen Transformationprozess anzupassen. Um dabei den Anforderungen des EU-Binnenmarktes gerecht zu werden, erachtet die Europäische Kommission eine umfassende Reform der Körperschaftsbesteuerung als notwendig. Im Jahr 2001 schlug die Kommission deshalb vor, für multinationale Unternehmen das Unternehmensteuersystem der separaten Gewinnbesteuerung durch eine formelbasierte Gewinnbesteuerung abzulösen. Aktuell wird die separate Gewinnbesteuerung vorwiegend auf der internationalen Ebene verwendet, während einige Länder wie die USA, Kanada, Deutschland und die Schweiz die Formelbesteuerung innerhalb ihrer förderalen Strukturen nutzen. Bei der separaten Gewinnbesteuerung wird jede Konzerntochter als eigenständiges Unternehmen behandelt, das der nationalen Steuergesetzgebung unterliegt. Der Wert des Zwischenhandels innerhalb der Unternehmensgruppe wird mit Hilfe von Transferpreisen ermittelt. Dabei sollen die firmeninternen Transferpreise dem sogenannten arm’s-length-Prinzip folgen, so dass sie den Einkauf des Produktes oder der Leistung von einem Drittanbieter widerspiegeln. Es hat sich jedoch in der Praxis gezeigt, dass es sich bei den unternehmensintern gehandelten Gütern und Dienstleistungen oft um firmenspezifische Produkte handelt, für die kein externer Vergleichsmaßstab existiert und die Ermittlung und Kontrolle angemessener Transferpreise erschwert. Dies führt zu einer Manipulationsanfälligkeit bei dem Prinzip der separaten Gewinnbesteuerung, welche als eine Ursache für die internationale Gewinnverlagerung zum Zwecke der Steuervermeidung gesehen wird. Daher betrachtet die Kommission die Gewinnkonsolidierung einschließlich der grenzüberschreitenden Verlustverrechnung zur Bestimmung der Steuerbemessungsgrundlage eines multinationalen Unternehmens als geeigneteren Ansatz für den EU-Binnenmarkt. Sie schlägt dafür die Einführung der Gemeinsamen konsolidierten Körperschaftsteuer-Bemessungsgrundlage (GKKB) vor. Für die Aufteilung der GKKB auf die einzelnen steuerberechtigen Länder enthält der Vorschlag die formelbasierte Gewinnaufteilung. Eine EU-weit gültige Aufteilungsformel ordnet dabei die Steuerbemessungsgrundlage, gemäß der geschäftlichen Aktivität des multinationalen Unternehmens in jedem Land, den Mitgliedsstaaten zu. Die Kommission will mit Hilfe der Formelfaktoren sowohl Produktion als auch Konsum angemessen abbilden und favorisiert die drei gleich gewicheteten Faktoren Vermögenswerte, Arbeit und Umsatz. Der Vorschlag einer GKKB hat eine andauernde polit-ökonomische Debatte über die Effizienzwirkungen und die Verteilungsaspekte eines Übergangs zur formelbasierten Gewinnbesteuerung in Europa ausgelöst. Die vorliegende Doktorarbeit setzt sich mit speziellen Themen dieser Debatte auseinander. Dazu wurden drei Aufsätze entwickelt, die spezifische Forschungsfragen beantworten und sich in die theoretische Literatur der optimalen Steuerpolitik in einem unkooperativen Steuersatzgleichgewicht einordnen lassen. Die Artikel basieren auf dem methodischen Konzept eines Nash-Steuerwettbewerbsmodells bei vollständiger Symmetrie, wobei den Ländern die Souveränität über die Körperschaftsteuersätze obliegt. Da die einzelnen Staaten die Auswirkungen Ihrer Steuerpolitik auf die anderen Mitgliedsstaaten ignorieren, kann ihr Verhalten fiskalische Externalitätten auslösen, welche eine ineffiziente Steuersatzwahl kennzeichnen. Der Fokus der Papiere liegt auf der Ableitung, Erklärung und Interpretation der sich aus dem Steuerwettbewerb ergebenden Ineffizienzen unter der separaten und der formelbasierten Gewinnbesteuerung. Das Ziel dieser Arbeit ist es, die verschiedenen Politikalternativen dahingehend zu vergleichen und zu diskutieren. Der erste Artikel bezieht sich auf die Diskussion über das “bessere” Körperschaftsteuersystem für Europa. Das Papier untersucht den Effekt eines Finanzausgleichsystems auf die Effizienzeigenschaften der Körperschaftsteuersätze, die unter dem Prinzip der separaten Gewinnbesteuerung bzw. der Formelbesteuerung gewählt werden. Ein Finanzausgleich sichert dann Effizienz, wenn der marginale Transfer die fiskalischen und pekuniären Externalitäten der Steuersätze widerspiegelt. Im Unterschied zu vorherigen Arbeiten erfüllt in unserem Modell der Steuerbasisausgleich diese Bedingung nicht. Stattdessen führt ein Ausgleich der Nationaleinkommen, das heißt der Kombination aus einem Ausgleich von Steueraufkommen und privatem Einkommen, unabhängig vom verwendeten Steuerprinzip zu Effizienz. Dieses Ergebnis weist darauf hin, dass es irrelevant ist, ob multinationale Unternehmen der separaten oder der formelbasierten Gewinnbesteuerung unterliegen, wenn parallel ein Finanzausgleichssystem der Nationaleinkommen existiert. Bei der Formelbesteuerung könnte der Steuerbasisausgleich zu effizienteren Ergebnissen als der Steueraufkommensausgleich führen, wenn die Lohneinkommensexternalität ausreichend groß ist. Obwohl in der EU kein explizites Finanzausgleichssystem exisitiert, das im Sinne unserer Analyse angelegt ist, wird ein Teil des EU-Budgets durch die Beiträge der einzelnen Mitgliedsstaaten finanziert. Die damit verbundene Einkommensumverteilung reicht zwar nicht zur Sicherstellung effizienter Körperschaftsteuersätze aus, jedoch könnte die Erweiterung eines bereits vorhandenen Systems durch die entsprechende Anpassung der Beiträge zum EU-Budget politisch leichter durchsetzbar sein als die vollständige Reform des Körperschaftsteuersystems. Der zweite Artikel beschäftigt sich mit dem Umsatzfaktor in der Aufteilungsformel. Die Aufnahme eines Umsatzfaktor als solches sowie die Frage, ob Umsätze dem Ursprungsland oder dem Bestimmungsland zugeschlagen werden, werden innerhalb der EU kontrovers diskutiert. Die GKKB-Arbeitsgruppe schlug im Jahr 2007 die Aufnahme der Umsätze nach dem Bestimmungslandprinzip vor, erwähnte aber gleichzeitig, dass eine Mehrzahl der Experten der Mitgliedsstaaten die Einbeziehung der Umsätze nach dem Ursprungslandprinzip bevorzugen würde. Zum Vorschlag der Europäischen Kommission zu diesem Thema aus dem Jahr 2011 wandte das Europäische Parlament ein, dass es die Gewichtung des Umsatzfaktors auf 10% absenken würde. Der Ausschuss für den Binnenmarkt und Verbraucherschutz forderte sogar die vollständige Streichung des Umsatzfaktors in der Formel. Im Gegensatz zu diesen Forderungen stehen die Entwicklungen in Kanada und den USA, wo der Umsatzfaktor immer mehr an Bedeutung gewinnt. Wir zeigen in einem Nash-Steuerwettbewerbsmodell mit zwei Ländern, Marktmacht und einer umsatzbasierten Aufteilungsformel, dass (i) der Übergang von der separaten zur formelbasierten Gewinnbesteuerung den Steuerwettbewerb abschwächt und dieWohlfahrt erhöht und (ii) mit einem Umsatzfaktor nach dem Ursprungslandprinzip der geringste Steuerwettbewerb auftritt. Das zweite Ergebnis ist auf eine negative Konsumexternalität zurückzuführen, welche der sowohl beim Ursprungsland- als auch beim Bestimmungslandprinzip auftretenden positiven Formelexternalität entgegenwirkt. Das dritte Papier untersucht den Kommissionsvorschlag, eine Übergangsphase von der separaten zur formelbasierten Gewinnbesteuerung zu schaffen. Während dieser Phase soll die Formelbesteuerung den Unternehmen optional zur Verfügung stehen. Die empirische Literatur zeigt, dass sich durch die Gewinnkonsolidierung die unfreiwilligen Befolgungskosten, die ein multinationales Unternehmens aufbringen muss, um die nationalen steuergesetzlichen Vorgaben zu erfüllen, verringern. Auf der anderen Seite steigen die diskretionären Kosten für Maßnahmen des Unternehmens, die der Gewinnverlagerung dienen. Der dritte Artikel bildet diese Erkenntnisse in einem Zwei-Länder-Modell ab, in welchem sich die multinationalen Unternehmen in der Höhe ihrer unfreiwilligen Befolgungskosten unterscheiden. Zusätzlich sehen sich Unternehmen, die die Formelbesteuerung nutzen, höheren diskretionären Kosten gegenüber, weil hier die Möglichkeiten zur Manipulation der Steuerbemessungsgrundlage deutlich eingeschränkt sind. Folglich werden nur die Unternehmen für die Formelbesteuerung votieren, bei denen unter der separaten Gewinnbesteuerung die unfreiwilligen Befolgungskosten den Steuervorteil durch die leichtere Gewinnverlagerung übersteigen. Wir leiten einen nicht negativen Schwellenwert der unfreiwilligen Befolgungskosten ab, ab welchem sich Unternehmen mit höheren Kosten für die Formelbesteuerung entscheiden. Unter Annahme von Symmetrie zeigen wir, dass, ausgehend von einem System mit separater Gewinnbesteuerung und nationaler Steueraufkommensmaximierung, eine optionale formelbasierte Gewinnbesteuerung die unkooperativ gewählten Steuersätze und das nationale Steueraufkommen für beide Länder erhöht. Basierend auf den Modellannahmen wird sogar das Niveau der ausschließlichen Formelbesteuerung erreicht, da bei gleichen Steuersätzen der Vorteil der besseren Gewinnverschiebungsmöglichkeiten irrelevant wird und nur die Ersparnis der unfreiwilligen Befolgungskosten als Entscheidungskriterium wirkt. In unserer Analyse führt die Optionalität der GKKB zu einer Effizientverbesserung in den beteiligten Ländern. Somit können wir ein Argument für die Vorteilhaftigkeit des GKKB-Vorschlags innerhalb der EU beitragen.

For many years, the provision of gambling services has proven to be a very profitable economic activity and, therefore, imposing VAT correctly on such services has turned out to be essential not only to maximize the amount of revenues that governments can collect (at least in those countries where such activities are not forbidden), but also to ensure fairness and competitiveness between gambling services providers. However, as shown in this chapter, the provision of gambling services does not seem to lead easily to the application of VAT. In the first part of the chapter, and for the purpose of discerning which could be the optimal method of taxing such services, two main systems are analysed and discussed: the traditional exemption method found in the European Union VAT system and the taxation method found in more modern VAT systems. The second part of the chapter addresses the new challenges brought about by the growing provision of online gambling services; more specifically, this part examines the best way to impose VAT on such services while respecting the destination principle, which is considered in the light of the OECD VAT/GST Guidelines and the numerous VAT reforms on the provision of services provided electronically that have started taking place in the last few years.

Until 1990, Argentina only taxed the supply of services that were exhaustively listed in the VAT Law; financial supplies were then beyond the reach of VAT. In September 1990, the Argentine Congress introduced a far-reaching amendment that extended the VAT scope to all supplies of services. Loan intermediary services are the most significant type of service within the financial supply category, and they are undoubtedly taxed with VAT as any other service supply in Argentina. For the specific case of financial supplies the VAT Law mandates that the time of supply is deemed to occur either at the expiration of the period in which the financial output must be paid, or at the date in which this output is fully or partially received, whichever occurs first. Loan intermediary services are subject to VAT if and when they are carried out in Argentina. Additionally, based on the destination principle generally adopted by the VAT Law, loan intermediary services received from abroad are also taxable when they are used or enjoyed in Argentina, and the recipient (borrower) is a registered VAT payer. The taxable amount is the gross interest received by a financial institution as consideration for the service provided. The standard VAT rate in Argentina stands currently at 21%. However, in the case of certain loan intermediary services a reduced 10.5% rate applies. Apart from VAT, in Argentina there is a separate and distinct indirect tax on gross turnover that is imposed by the provinces, with similar characteristics across provincial jurisdictions.

The taxation of cross-border transactions within federal or common markets presents significant challenges to the efficient and fair application of VAT. This article discusses the interstate tax jurisdiction and collection rules applied in the European Union, the United States and Canada. The analysis finds that while the destination principle is dominant, there are very important differences in law and in practice between the three jurisdictions. In the EU, the cost of following the destination principle appears to be significant complexity and fraud. In the US, the absence of a VAT places a significant barrier to achieving the principle since the use tax is unable to effectively fix the problems. In contrast, the system in place in Canada, while complex, seems to do a good job at protecting the sales tax base in relation to interprovincial cross-border transactions.

V magistrski nalogi analiziram proces harmonizacije na področju davka na dodano vrednost v Evropski uniji. Od uvedbe davka na dodano vrednost je bila obdavčitev prometa blaga in storitev po načelu namembne države zamišljena kot začasna rešitev in Evropska komisija si je ves čas prizadevala za prehod na obdavčitev po načelu države porekla. S tem bi bili izpolnjeni pogoji za polno delovanje notranjega trga, kjer bi bil promet blaga in storitev med državami članicami obdavčen na enak način kot promet na nacionalnem trgu. Za vzpostavitev resničnega notranjega trga EU je potrebno končati prehodno obdobje, ki je še vedno v veljavi. Uvedba dokončnega sistema davka na dodano vrednost v skladu z načelom države porekla zahteva večjo stopnjo usklajenosti v strukturi in višini davčnih stopenj med državami. Evropska komisija je vedno trčila na kar močan odpor držav članic na vse predloge za zmanjšanje razlik v nacionalnih davčnih sistemih. Podrobno je analizirana kompleksnost pravnih predpisov, na katerih temelji prehodna ureditev, ki dopušča državam članicam nadaljevanje uporabe številnih izjem, ki odstopajo od splošnih pravil in niso združljiva s temeljnimi cilji notranjega trga. V zaključnih ugotovitvah je analizirana možnost, da bo dokončna ureditev davka na dodano vrednost sploh uveljavljena in če, kakšna bo lahko končna različica te ureditve. This Masters thesis examines the harmonization process of value added tax in the European Union. Since the introduction of VAT, the taxation of supplies of goods and services on the destination principle have been envisaged as a temporary solution and the European Commission has all the time been seeking the solution for shifting to the taxation, based on the origin principle. This would facilitate the full functioning of the internal market, where trading transactions of goods and services between Member States would be applied in the same way as the one on national market. For the establishment of EU internal market it is essential to end the transitional period, which is still in force. Introduction of definitive VAT system, based on the origin principle, requires a greater degree of harmonization in the structure and the level of tax rates between the Member States. The European Commission has always been facing with strong opposition from Member States on various proposals to reduce differences between national tax systems. The transitional regime’s legal provisions complexity, have been accurately examined. This existing system, allows Member States to continue the use of a number of exemptions that deviate from the general rules and are not compatible with the fundamental objectives of the internal market. In the concluding observations, I am examining the possibility that the definitive VAT regime could be implemented at all, and what will be the final version of such a regime.

Rapid growth in e-commerce has altered the ability of jurisdictions to enforce commodity taxes on a destination basis. This results in different effective tax rates depending on the way in which goods and services are purchased and the characteristics of both the products and the sellers. We discuss the arguments for the destination principle as the appropriate place-of-taxation rule for consumption taxation of cross-border trade. We analyze various recent reforms to the Value Added Tax in the European Union in response to e-commerce. We then examine various policy options in the United States – maintaining the status quo, changing nexus rules, states adopting information reporting, and national reforms that require firms to remit taxes regardless of physical presence – and relate them to the recent European reforms. We conclude based on our analysis and the recent European Union experience that reforms at the national level appear to be the important next step to enforcing commodity taxes at destination in the U.S.

Prijevare u području poreza na dodanu vrijednost nanose štetu kako nacionalnim financijskim interesima, tako i financijskim interesima Europske unije. Fenomen prijevara u okvirima sustava poreza na dodanu vrijednost pojavio se 1993. nakon ukidanja carinskih kontrola. Zbog primjene sustava oporezivanja prekograničnih transakcija unutar Europske unije na temelju načela odredišta, porezne prijevare pojavljuju se pri transakcijama s dobrima, a poslije i u vezi s transakcijama s uslugama. U radu se razmatraju razlozi nastanka takvih vrsta prijevara i tržišta podložna nezakonitom djelovanju te se analiziraju moguća rješenja za njihovo sprječavanje. S obzirom na to da su neka od rješenja već u primjeni, analizira se njihova učinkovitost i izlaže mogućnost kombiniranja istih., Frauds that occur in the area of value added tax damage not only financial interests of the state, but also the financial interests of the European Union. The phenomenon of fraud in the scope of the value added tax system appeared in 1993 upon the abolition of customs controls. Due to the application of the cross-border taxation system for transactions within the European Union based on the destination principle, tax frauds occur in transactions in goods, and later in connection with transactions in services, as well. The paper deals with reasons for the occurrence of these types of frauds, with markets that are subject to illegal activity and with an analysis of possible solutions for their prevention. Since certain prevention solutions are already in use, the paper analyses their effectiveness and presents the possibility of their combination.

We combine consumption generated cross-border pollution and public pollution abatement in a theoretical framework to examine the efficiency of the destination and origin principles of commodity taxation. The key result of our study is that with public pollution abatement, the non-cooperative equilibrium origin-based consumption taxes are set efficiently. This result holds not only in the context of symmetric countries, but under certain conditions carry over also to asymmetric countries. The non-cooperative equilibrium destination-based consumption taxes are inefficient. In the absence of public pollution abatement, the Nash equilibrium commodity taxes under either taxation principle are inefficient.

This paper presents numerical simulation results that suggest that China can both reduce its trade imbalance and receive welfare benefits by switching the value added tax (VAT) regime from the current destination principle to an origin principle. We modify the traditional general equilibrium tax model to capture endogenous trade imbalances along with endogenous factor supply, a fixed exchange rate and a non-accommodative monetary policy structure which supports the Chinese trade imbalance. We calibrate model parameters to 2008 data and simulate counterfactual equilibrium for VAT tax basis switches in which the trade imbalance changes. Our results suggest that given China's trade surplus VAT regime switching to an origin basis can decrease China's trade surplus by over 40%, and additionally increase Chinese and world welfare. This has implications for present G20 discussions on finding ways to adjust global trade imbalances.

This paper analyses the conflict-of-law problems raised by prospectus liability. Firstly, it characterises such liability. This characterisation is an essential element for the analysis since it determines whether it is the Rome I or the Rome II Regulation that is applied. Secondly, it highlights the difficulties raised by the application of the Rome II Regulation in this context and, in particular, the identification of the place of damage and the interplay between the regulatory rules, subject to the state-of-origin principle, and the private-law rules, subject to a sort of state-of destination principle. And finally, from a practical point of view, it includes some guidelines to cope with this issue, both from a lege lata and from a lege ferenda perspective.

This paper examines a tax jurisdiction issue of the consumption tax system with regard to Japanese service trading. The Destination principle for service trading has not been established in Japanese consumption tax, but taxation at the place of consumption is gradually being adopted for value-added taxes in the EU. Under these circumstances, it is necessary for us to revise the Japanese consumption tax system in favor of taxation at the place of consumption, using EU-type value-added tax systems as a source of reference. Accordingly, it would be effective for us to conclude a taxation treaty for consumption tax on assumption of taxation at the place of consumption. However, international cooperation with related countries is necessary for concluding a taxation treaty, so it would require a long time before introduction. In Japan as well, should actively discuss the neutrality of taxation and influences on tax revenue based on discussions in the OECD and experiences with of value-added tax systems in EU countries.

The fact that developing countries do not have carbon emission caps under the Kyoto Protocol has led to the current interest in high income countries in border taxes on the ‘virtual’ carbon content of imports. We use GTAP data and input–output analysis to estimate the flows of virtual carbon implicit in domestic production technologies and the pattern of international trade. The results present striking evidence on the wide variation in the carbon-intensiveness of trade across countries, with major developing countries being large net exporters of virtual carbon. Our analysis suggests that a tax on virtual carbon could lead to very substantial effective tariff rates on the exports of the most carbon-intensive developing nations. As an illustration, we find that average tariff rates of 10%, 8% and 12% would be faced by imports from China, India and South Africa if carbon is taxed at $50/ton CO2. Moreover, there is wide variation in intensiveness across sectors within countries with implications for the disparate effective tariff burdens on particulars parts of the economies of these countries. Such empirical findings, we argue, are useful for framing on-going discussions about the principles and practice of border taxes on virtual carbon.

地方消費税は他の地方税と比べて税収の偏在性が少なく安定性を備えた税であり、今後道府県税の主要税目としてその役割はますます重要となってくることから、地方消費税の問題点を改善していく必要がある。本稿では、これまで提案されたあるいは実施されている代表的な地方付加価値税の課税方式を参考にして、地方消費税の今後の課題と変革の方向を検討する。地方消費税において地方団体に自主的な税率設定権を付与することは理論的には可能であるとしても、現行の地方消費税制度の構造的要因、行政区域の狭小さ、および徴税費用の高まりを考慮すると、考察の対象とした課税方式をただちに地方消費税に採用することはほとんど困難である。当面のあいだ、現行の清算方式と一定税率を維持するとして、課税自主権を確保するために譲渡割の賦課徴収については地方税法の本則通り都道府県が行うことが望ましく、清算の基準となる課税標準の推定の精度を高めることが大きな課題である。また、国と地方の税務行政当局者間の情報交換に関して、その向上を図ることも課題となる。, In this article we will discuss the challenge and the direction for change of local consumption tax considering the local value added tax system proposed or in effect so far. Although it is theoretically possible to grant rights to local governments to set tax rate independently for local consumption tax, it is very difficult to deploy the taxation system that we have considered right away, regarding structural factor of local consumption tax, small administration area and increasing tax collection cost. At the moment, it is recommended to maintain the current clearance system as well as fixed tax rate, with the prefectures collecting consumption tax as defined in local taxation law while our big challenge is how to increase accuracy of taxation standard estimation which is the standard for clearance. Also, frequent information sharing about tax administration between central and local governments is also important.

This paper analyzes the choice of commodity tax base when countries set their taxes non-cooperatively in a two-country symmetric reciprocal dumping model of intra-industry trade with free entry and trade costs. We show that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high or demand is linear. For lower levels of trade costs and nonlinear demand, the welfare ranking of the two tax bases is ambiguous. Hence, there is no clear preference for a tax principle with an ongoing movement towards closer economic integration.

Motor fuel is taxed by European Union member states where purchased. This article describes (a) the case for destination-based taxation of motor fuels, (b) economic distortions, incentives for destructive tax competition, and questionable division of tax base inherent in purchase-based taxation of commercial motor fuel, (c) loss of fiscal sovereignty inherent in minimum tax rates, imposed to alleviate the first two problems, and in uniform rates, (d) the apportionment-based system employed in the US and Canada and its advantages, (e) technology to determine distance traveled in each member state, and (f) legal and political obstacles to adopting an apportionment-based system.

SUMMARY The principle of mutual recognition is almost universally acclaimed for removing barriers to trade, for enabling regulatory competition, and for preserving scope for regulatory autonomy instead of embarking on a path to harmonisation and centralisation. By using economic theories of legal federalism and regulatory competition, this paper shows that mutual recognition leads to a number of inconsistencies, which question its suitability as a conflict of law rule that guarantees a stable allocation of regulatory powers within a two-level system of regulations. Mutual recognition should be understood more as a dynamic principle, which triggers a reallocation of regulatory powers between different jurisdictional levels. It leads either back to the country of destination principle, to a free market for regulations, or to harmonisation. The European experience suggests that a regime of mutual recognition is primarily another path to convergence and harmonisation, instead of being an instrument that preserves decentralised regulatory powers or even regulatory competition. The welfare gains from achieving market integration should be balanced against the welfare losses of an inefficient allocation of regulatory powers.

We evaluate the incentives for strategic commodity tax-setting under destination and origin regimes when competition is imperfect and commodity taxes must be used to finance the government budget. Different cases of international duopoly are compared, where firms compete over quantities or prices and markets are segmented or integrated. In each setting the international spillovers of tax policy are isolated and evaluated at the Pareto-efficient tax rate. We find that origin-based commodity taxation leads to a downward competition of tax rates in each of the models analysed, whereas no similarly broad-based incentives for beggar-thy-neighbour policies exist under the destination principle.

We study the positive implications of commodity taxation and tax harmonization under the destination and origin principles when firms are monopolistic competitors facing variable demand elasticity and segmented markets. Our emphasis is on the international location of firms in the presence of market size asymmetries and trade costs. Under the destination principle, an increase in the tax rate of a country always causes some firms to relocate to the other. This effect may be reversed under the origin principle when economic integration is deep enough. Under tax harmonization the choice of a common tax principle is irrelevant for the market outcomes and for the global tax revenues. It affects, however, the distribution of revenues between small and large countries. (c) 2006 Elsevier B.V All rights reserved.

Introduction to International Trade For most countries with VATs, international trade is a significant component of their economies. A country with a VAT must define the jurisdictional reach of the tax. Should the tax reach global supplies or should it be limited to supplies within the country’s territory? Whether global or territorial, should the tax be imposed on production within the country (an origin principle VAT), on domestic consumption (a destination principle VAT), or some combination of the two? Almost every country with a VAT imposes a territorial VAT that relies on the destination principle to define the jurisdictional limits of the tax. Under a pure destination principle, imports are taxed and exports are completely free of tax (zero-rated). With this system, it is important to identify the value of goods and services that are exported (and when they are exported) and identify the value of taxable imports and determine when they are taxable. This chapter discusses the rules that determine where a supply takes place, including the troublesome issues on cross-border transactions relating to the place where services are rendered and intangibles are supplied. The location or place of the supply of cross-border services has become more significant with the advent of electronically supplied services. If the place of supply rules applicable to the sale of goods and those applicable to the sale of services differ, the supplier must determine whether the sale is of goods or services, and this may be more difficult in the case of electronic commerce. For example, if computer software, music, and videos are transmitted by electronic signals rather than in compact disks or other physical form, is the transaction a sale of goods or a sale of services? Sales of standard packaged software have been treated as sales of goods, but sales of customized software have been treated as sales of services.

VAT is a consumption tax imposed at each step of the manufacturing process enabling revenue authorities to collect the tax in stages. There are various multistage methods. In terms of the ‘destination principle’ VAT is imposed on the consumer in the country where the goods or services are consumed. Conversely the ‘origin principle’ is effectively the inverse of the ‘destination principle’. ‘Output tax’ refers to the tax imposed and collected by a seller on a taxable sale. ‘Input tax’ is a “credit that a taxpayer may take against output tax for the VAT that was paid on the purchases that qualify for credit” (Schenk, Alan & Oldman, Olivier, Value Added Tax, A Comparative Approach (2007) Cambridge University Press, New York, USA, p21).

The point at issue is whether it is possible for VAT jurisdictions to effectively interact with non-VAT jurisdictions in regard to eCommerce.

We analyze the choice between the origin and destination principles of taxation when there is product differentiation and Bertrand competition. If taxes are redistributed to consumers and demand is linear the origin principle dominates the destination principle whatever the degree of product differentiation and extent of economic integration. With nonlinear demand the origin principle dominates if there is sufficient economic integration. When the social value assigned to tax revenue is higher than the private value, the destination principle dominates for intermediate values of product differentiation and economic integration. The same results are also shown to hold with Cournot competition.

Recent work has started to analyze the choice of international commodity tax base under conditions of imperfect competition. This paper focuses on the effects of changing levels of trade barriers in a model where firms engage in duopoly competition and governments set commodity taxes non-cooperatively. It is shown that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high, but the ranking of the two tax bases is reversed for low levels of trade costs. We conclude that the case for origin-based commodity taxes becomes stronger when barriers to trade fall.

This paper shows that under imperfect competition, the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.

Each country must decide (i) whether, and if so at what rate, to tax its citizens/ residents on their foreign-source income (e.g. wages, interests, dividends, etc.); and (ii) whether, and if so at what rate, to tax foreigners on their income originating from sources within the jurisdiction. This chapter describes the main principles of international taxation.

The current international tax system based upon the principles of source and residence is no longer suited to a globalised world economy, and the fundamentals of the international tax system need to be re-examined. An R+F based cash-flow tax based on the principle of destination has been proposed as a suitable alternative to taxing corporations in an international setting. The aim of this paper is to discuss the legal and practical issues which would arise in the implementation of such a tax, namely how a destination-based tax could be effectively designed and implemented. For this purpose we draw on experiences with designing VAT systems worldwide. It is proposed that the destination principle should be implemented through use of the customers’ location as the main legal proxy. We argue that the country where the customer is located has both the substantive jurisdiction to tax, i.e. the legitimacy to impose tax, and enforcement jurisdiction to tax, i.e. the effective legal and implementing means of collecting the proposed tax. As regards enforcement jurisdiction to tax, we propose that a one-stop-shop system similar to that being experimented in VAT as the most effective means of collecting tax. Other potential implementing issues are addressed, namely deductibility of expenses and tax credits, susceptibility to avoidance and fraud, treatment of financial transactions, and treatment of small businesses. We conclude that, if it were applied in an international cooperation setting, it would indeed be legitimate and administratively possible to implement a destination-based corporate tax.

Im Rahmen der mehrwertsteuerlichen Verbrauchsbesteuerung offenbart sich die eminente Bedeutung des Vorsteuerabzugs insbesondere beim grenzüberschreitenden Handel mit Waren und Dienstleistungen. Der Abzugsmechanismus kann nämlich den Außenwirtschaftsverkehr vor mehrwertsteuerrechtlich bedingten Handelshemmnissen bewahren. In der Arbeit wird zunächst der herkömmliche Begriff der Handelshemmnisse als staatliche Benachteiligungen von Wirtschaftsleistungen aus dem Ausland rezipiert. Für die Mehrwertbesteuerung erfährt dieser Begriff jedoch eine Erweiterung. Die mehrwertsteuerlichen Ungleichbehandlungen können am Maßstab des Bestimmungslandprinzips nachgewiesen werden. Dieses Prinzip lässt eine Besteuerung nur in dem Land zu, in dem die jeweilige Leistung verbraucht wird (daher auch Verbrauchslandprinzip genannt). Gelangt eine wirtschaftliche Leistung aus dem Ursprungsland in das Bestimmungsland und erhebt das Ursprungsland auf die „exportierte“ Leistung die Mehrwertsteuer, ist eine Entlastung im Wege eines Vorsteuerabzugs (oder einer Vorsteuererstattung) vorzusehen. Daher ist der Begriff der Handelshemmnisse für mehrwertsteuerliche Zwecke um die Diskriminierung von Wirtschaftsleistungen in das Ausland zu ergänzen. Zur Vermeidung von Handelshemmnissen muss das Ursprungsland demzufolge materiell ein unlimitiertes Recht zum Vorsteuerabzug zugestehen und formell die ungehinderte Ausübung dieses Rechts zulassen. Zugleich ist es dem Bestimmungsland grundsätzlich verwehrt, die „importierte“ Leistung nur deswegen einer anderen Mehrwertsteuerbelastung als inländische Leistungen zu unterwerfen, weil sie aus dem Ausland herrührt. Für den grenzüberschreitenden Waren- und Dienstleistungsverkehr zwischen EU-Mitgliedstaaten und der Türkei werden im Mehrwertsteuerrecht der EU bestimmte Restriktionen des Vorsteuerabzugs festgestellt. In der Türkei ansässige Erbringer oder Empfänger von steuerpflichtigen Leistungen können einen Abzug der in einem EU- Mitgliedstaat ausgelösten Vorsteuer in Form der Vorsteuererstattung nur nach Maßgabe der Richtlinie 86/560/EWG verlangen. In dieser Richtlinie werden den EU-Mitgliedstaaten allerdings wesentliche (politische) Spielräume zugestanden, die Vorsteuererstattung an drittlandansässige Steuerpflichtige an Bedingungen, wie etwa den „Vorbehalt der Gegenseitigkeit“ oder die die Beauftragung eines Steuervertreters, zu knüpfen. Hinzu kommt der von der Richtlinie angeordnete Ausschluss der Vorsteuererstattung, wenn der Steuerpflichtige aus der Türkei bestimmte Finanz- oder Versicherungsumsätze ausführt oder vom jeweiligen Mitgliedstaat zu bestimmende Ausgaben tätigt. Im Mehrwertsteuerrecht der Türkei sind beim grenzüberschreitenden Leistungshandel ebenfalls Verkürzungen des Rechts auf Vorsteuerabzug und der Ausübung dieses Rechts zu Lasten von im EU-Ausland niedergelassenen Steuerpflichtigen zu konstatieren. Empfangen diese Steuerpflichtigen Waren oder Dienstleistungen aus der Türkei, die der Mehrwertsteuer unterworfen sind, ist ein Vorsteuerabzug regelmäßig nicht zulässig. Ferner unterliegen unionsansässige Steuerpflichtige beim Warenimport in die Türkei grundsätzlich der türkischen Einfuhrmehrwertsteuer. Eine Entlastung von dieser Steuer hängt davon ab, ob die Steuerpflichtigen aufgrund anderer Umsätze Mehrwertsteuern schulden, von denen ein Abzug möglich wäre. Dies wird nur äußerst selten der Fall sein. Schließlich ist für EU- Steuerpflichtige, die in der Türkei grenzüberschreitende steuerpflichtige Umsätze tätigen, keine Vorsteuererstattung vorgesehen, wenn die für bezogene Eingangsleistungen anfallende Vorsteuer die für die getätigten Umsätze geschuldete Steuer übersteigt („überschießende Vorsteuerbelastung“)., In the context of Value Added Tax (VAT) on consumption, the importance of VAT deduction is increasing particularly by cross-border trade with goods and services. That is to say, the mechanism of deduction may prevent the foreign trade from VAT caused trade barriers. In this work, the conventional concept of trade barriers is initially clarified as governmental discrimination of economic sales from abroad. For VAT purposes, this concept takes a supplementation. The discrimination in terms of VAT can be proven on the basis of the so-called destination principle. According to this principle, it is solely admitted taxes to be imposed in that country in which supplied goods or services are consumed. Therefore, this principle is also called country of consumption principle. If goods or service have arrived at the country of destination and are burdened by the country of origin with VAT, this country should provide for deduction or refund of the levied VAT. Thus, the concept of trade barriers is to be supplemented by discrimination of economic sales to foreign countries. Hence, the country of origin has to award the unlimited right to deduct input VAT and the performance of this right in order to prevent trade barriers. Additionally, it is generally not allowed to levy higher taxes on the “imported” sale in the country of destination for the reason that the sale is originated from abroad. Subsequently, it is discovered certain restrictions of the VAT deduction concerning cross-border transactions of goods and services between EU member states and Turkey from the viewpoint of VAT law in the EU. Residents in Turkey as supplier or receiver of taxable sales can claim VAT deduction only in accordance to Directive 86/560/EEC. This Directive concedes essential (political) scope for limitations of VAT deduction (refund), e.g. “of reciprocity” or the appointment of a tax representative, to the member states. Furthermore, the VAT refund is unavoidable excluded by the Directive, if the taxable person from Turkey supplies particular sales of insurances and financial products or incur some expenditures determined by the respective EU member state. Pursuant to Turkish VAT law, it can be stated that there are shortcomings of VAT deduction detrimental to EU residents with regard to the cross-border trade. If EU taxable persons receive goods or services from Turkey, which are subject to VAT, a VAT deduction, on a regular basis, is not permitted. Moreover, taxable persons from EU, who imports goods to Turkey, are basically obliged to pay import VAT. The deduction of this tax requires that the taxable person owes VAT due to other taxable sales in Turkey. The import VAT could be deducted from this VAT debt. But it is rarely the case that there is that kind of VAT debt. Finally, EU taxable persons supplying taxable cross-border sales in Turkey are not eligible to VAT deduction, to the extent that the input VAT on purchases exceeds the VAT debt on the cross-border sales.