Technical Fees, Royalties Services - International Fiscal 技术服务费，特许权使用费与服务-国际财政.pptVIP

357829 IFA (India Branch) – OECD International Tax Conference Technical Fees, Royalties and Services Why this Topic Is on the Agenda The issue to address - what payments should be subject to withholding tax The essential conflict - a system oriented towards source basis taxation vs. those dedicated to reducing withholding tax burdens Manifestations of the Tensions U.S.-India Treaty - “included services” concept Significant departure from U.S. domestic law Software and E-commerce Payments High-Powered Committee Report OECD Technical Advisory Group on Income Characterization Report Significant Controversies at Audit, Tribunal, Court and Competent Authority Levels Policy Aspects What should be the basis of withholding tax imposition? Impose tax on local source income Respond to real or perceived imbalances in investment and reward flows Other industrial/fiscal policy goals Justification for imposing tax on gross income Pure (or close to it) profit flows Not true for rents/royalties (as compared to dividends/interest) Enforcement and collection concerns Practical Aspects The core technical issue tends to be characterization Globally connected economy raises these issues in many contexts Presentation will cover differences in treatment in three areas Labor oriented services E-commerce payments Software payments Labor Oriented Services Know-how transfers Technical services without know-how transfer Managerial, etc. services Labor Oriented Issues How have these issues been handled? U.S. domestic law guidance Indian domestic law guidance U.S.-India Treaty and MOU Treaty creates significant disparities in source country treatment Indian providers can still rely on U.S. domestic law But PE Article opens big gap in protection for on-site services E–commerce Transactions Purchase of digitized information Subscription to on-line portal or information services Subscription to on-line entertainment sites Remote data processing Single payments for non-tangible features E–commerc