Global Minimum Corporate Tax: Interaction of Income Inclusion Rule with Controlled Foreign Corporation and Tax-sparing Provisions
By Kuldeep Sharma, ADIT (CIOT,UK), FTI (Australia), Insolvency Professional (IBBI)
The OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework) agreed on 8 October 2021 to the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. The Two-Pillar Solution will ensure that MNEs will be subject to a minimum tax rate of 15%, and will re-allocate profit of the largest and most profitable MNEs to countries worldwide. Under these recommendations, inter alia, Pillar Two consists of two interlocking domestic rules (together the Global Anti-Base Erosion Rules (GloBE)), which includes an Income Inclusion Rule (IIR) to impose a top-up tax on a parent entity in respect of the low taxed income of a constituent entity. The IIR shall be incorporated in domestic laws of opting jurisdictions, and seems to have profound interaction with the Controlled Foreign Corporation (CFC) and tax-sparing provisions. The IIR operates in a way that is closely comparable to a CFC rule and raises the same treaty questions as raised by CFC rules, although there are a number of differences between the IIR and the CFC rules. In the context of IIR, there may be a case when the Ultimate Parent Entity (UPE) is taxed on the Constituent Entities’ (CEs) income and the spared tax is not considered as covered taxes for calculating the Effective Tax Rate (ETR) of the CE. This generates a situation for developing countries in which they have to shore up their ETR by overhauling their tax incentive regimes and retooling domestic legal framework for more effective taxation of MNEs to avoid losing a significant portion of their tax right/base to a developed country. Adoption of IIR (which is an extension of CFC rules) under Pillar Two is therefore going to create conflict with the tax-sparing rules. From the perspective of developing countries, the adoption of GloBE implies losing tax incentives as a tax policy instrument to attract foreign direct investment. This is why every country involved, but especially developing countries, should undertake a thorough examination to determine whether such measures are convenient for their interests in the long run.
Direito Brasileiro da Concorrência e Acesso à Saúde no Brasil: Preços Exploratórios no Setor de Medicamentos
Por Bruno Braz de Castro
O presente trabalho tem por objeto analisar interfaces entre o Direito da Concorrência brasileiro e o tema do acesso a medicamentos, com especial atenção aos abusos de direitos de propriedade industrial em seus efeitos exclusionários e exploratórios. O trabalho analisa a jurisprudência do Conselho Administrativo de Defesa Econômica (CADE) no setor de medicamentos e discute os abusos visando à imposição ilegítima de direitos de propriedade intelectual inexistentes ou inválidos com finalidade anticompetitiva. Em seguida, aborda os abusos no exercício de direitos de propriedade industrial que sejam, por si, válidos: práticas exclusionárias, voltadas à elevação artificial de barreiras à entrada, e práticas exploratórias, traduzidas diretamente no exercício de poder de mercado em detrimento ao consumidor. Estas últimas são manifestadas na forma de preços excessivos exploratórios, degradações contratuais, de qualidade ou de privacidade, bem como restrições na oferta como o açambarcamento/impedimento de exploração de direitos de propriedade industrial. O artigo conclui pela validade e eficácia jurídica da proibição a preços exploratórios pela Lei de Defesa da Concorrência vigente, com certas preocupações metodológicas a fim de minorar o risco de condenações errôneas (como a construção de testes “screening” de mercados-candidatos a intervenção). Em atenção a tais diretrizes, o setor de medicamentos comparece como candidato importante à atenção antitruste, haja vista a magnitude dos prejuízos potencialmente derivados da não-intervenção sobre a prática. Remédios nessa seara, de modo importante, devem focar na identificação e solução dos problemas competitivos estruturais do setor. Em caso de medicamentos sujeitos à regulação de preços pela Câmara de Regulação do Mercado de Medicamentos (CMED), a expertise técnica da autoridade concorrencial poderá ser de grande valia em sede de advocacia da concorrência, o que é demonstrado à luz das discussões recentes acerca do reajuste extraordinário de preços em virtude de problemas concorrenciais de determinado mercado.
The considerable health, economic and social challenge that the world faced in early 2020 with COVID-19 continued and worsened in many parts of the world in the second half of 2020 and into 2021.
How can an agency like WHO be given a stronger voice to exercise authority and leadership?
This book is a collection of research papers produced by the author between 2020 and early 2021 that helps answer this question. The topics address the state of thinking and debate – particularly with regard to medicines and vaccines – that would enable a response to this pandemic or subsequent crises that may emerge.
This book presents the South Centre’s reflections and studies to provide policymakers, researchers and other stakeholders with information and analysis on issues related to public health and access to medicines and vaccines in the context of COVID-19.
Author: Germán Velásquez, Special Adviser for Policy and Health of the South Centre
Competition Law and Access to Medicines: Lessons from Brazilian Regulation and Practice
by Matheus Z. Falcão, Mariana Gondo and Ana Carolina Navarrete
Competition law may play an important role in drug pricing control by containing high prices derived from economic violations. Since the use of competition tools is not limited by the TRIPS Agreement or other international binding disciplines, there is ample policy room to explore how countries, especially in the Global South, can benefit from strengthening their jurisdiction on that matter. This article briefly explains the Brazilian Competition System by describing the structure of the Brazilian competition authority (CADE – Administrative Council for Economic Defense) and the main economic violations set forth by Brazilian law. It describes the convergence of competition with the consumer protection system. It also discusses three relevant pharmaceutical market cases examined by the competition authority (sham litigation, overpricing and economic abuse, buy-and-raise and exclusionary practices). Finally, it presents some lessons from the Brazilian case on the challenges of using competition law to confront abuse or misuse of intellectual property rights in the pharmaceutical market, with lessons to other developing countries.
Un albatros autour du cou des pays en développement – Clause NPF dans les conventions fiscales
Par Deepak Kapoor, IRS
L’inclusion dans les conventions en matière de double imposition d’une clause de la nation la plus favorisée (« NPF ») est une incarnation du principe fondamental de la non-discrimination et vise à permettre aux pays signataires de tirer également parti des perspectives en matière de commerce et d’investissement. L’objectif de dispositions telles que les clauses NPF et de non-discrimination dans les conventions fiscales est de favoriser l’équité entre les différents pays signataires. Dans les conventions fiscales conclues entre pays développés et pays en développement, les clauses NPF servent également d’outils de négociation pour obtenir de meilleurs taux d’imposition.
Cependant ces clauses ont aujourd’hui des effets négatifs pour les pays de source des revenus, qui sont pour la plupart des pays en développement. Lorsqu’elles sont appliquées entre deux pays également développés, les clauses NPF ne constituent pas, généralement, une source de danger potentielle, mais lorsque la convention est conclue entre un pays développé et un pays en développement, où l’un des pays reçoit plus d’investissements de l’autre qu’il n’en réalise, le danger est réel. De fait, des difficultés sont apparues récemment en raison d’interprétations divergentes de ces clauses par les tribunaux, qui ont contraint les pays source à appliquer, sur la base des termes contenus dans la clause NPF, un taux d’imposition plus avantageux que celui prévu dans la convention fiscale et à modifier son champ d’application, remettant en cause l’objectif et l’utilité même des clauses NPF.
Il ressort des procédures judiciaires intentées en Afrique du Sud et en Inde que les clauses NPF peuvent aboutir à une réduction de la fiscalité et entrainer une érosion involontaire de la base d’imposition des pays de source des revenus. Le problème réside également dans la rédaction et la formulation ambiguë des clauses NPF, qui entrainent des répercussions négatives inattendues pour les pays ayant pris des engagements dans le cadre de ces conventions. Il est aujourd’hui urgent pour les pays source de procéder à un examen approfondi des clauses NPF figurant dans les conventions fiscales existantes, de la manière dont elles s’articulent entre elles et des retombées négatives qu’elles pourraient avoir sur d’autres conventions.
Article 12B – Une solution de convention fiscale par le Comité fiscal des NU pour taxer les revenus numériques
Par Rajat Bansal
L’imposition sur les revenus des entreprises multinationales dans des activités numériques par les juridictions de la source ou de marché est actuellement le défi le plus important pour la communauté fiscale internationale. La composition actuelle du Comité fiscal des Nations Unies a finalisé, en avril 2021, un accord de convention fiscale pour relever ce défi. Ce rapport explique la raison d’être d’une solution particulière consistant à insérer un nouvel article dans le Modèle de convention des Nations Unies, ses mérites et comment il peut être bénéfique pour tous les pays, en particulier les pays en développement.
Conceptualisation d’un instrument multilatéral des Nations Unies (IML des NU)
Par Radhakishan Rawal
Les récentes modifications apportées au modèle de convention des Nations unies concernant les doubles impositions entre pays développés et pays en développement ont donné lieu à l’introduction de dispositions plus avantageuses pour les pays en développement en matière d’imposition des revenus, en permettant en particulier l’imposition des revenus étrangers. Il s’agit notamment des revenus tirés des services numériques automatisés, des rémunérations sur les logiciels, de plus-values et autres. Ces dispositions sont généralement intégrées, au terme de longues négociations, dans les conventions fiscales bilatérales. Une convention des Nations Unis, en tant qu’instrument multilatéral, permet en une seule négociation de modifier plusieurs conventions fiscales et contribue ainsi à ce que les pays en développement puissent percevoir plus rapidement des recettes fiscales. Le présent rapport sur les politiques examine la forme qu’un tel instrument multilatéral peut revêtir.
Jamaica’s Perspective on Reform of the Global Investment Regime
By Omar Chedda
The Covid-19 pandemic has dealt a severe blow to the world economy, and in particular, Jamaica’s economy, due to supply chain bottlenecks and reduction of tourism, on which Jamaica is heavily dependent. This is the context in which Jamaica is now reviewing its investment regime to ensure that investments contribute to recovery, building resilience and sustainable development, while improving investor rights and obligations in line with global trends.
Potential Claims related to IP and Public Health in Investment Agreements: COVID-19, the Proposed TRIPS Waiver and Beyond
By Cynthia Ho
An under-examined issue during the COVID-19 crisis is the potential liability of countries under investment agreements for taking steps to mitigate COVID issues. This Policy Brief provides an overview of how countries may be liable to companies for taking domestic action to protect public health, including pre-COVID claims related to Intellectual Property (IP), as well as possible claims because of COVID emergency measures, including claims that could result if the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Waiver was adopted. The current COVID-19 crisis opens the opportunity to consider and reevaluate the unnecessary threat of international agreements that allow for investment claims and potentially consider their termination.
Améliorer des règles du nexus pour une répartition équitable des droits d’imposition pour les pays en développement
Par Radhakishan Rawal
L’une des questions posées dans le Premier Pilier sur les discussions sur l’imposition de l’économie numérique est le seuil du nexus, c’est-à-dire le lien de rattachement au pays, qui déterminerait quelles entreprises multinationales (EMN) ont une présence imposable. Les grandes économies développées ainsi que les petites économies en développement peuvent être privées de droits d’imposition en raison des seuils des nexus tels que décrits actuellement dans la proposition du Premier Pilier. De plus, même si des seuils plus petits sont adoptés, certains pays peuvent encore se voir refuser des droits d’imposition. Un seuil financier n’a jamais été un paramètre de répartition des droits d’imposition entre les pays. Un ajustement mineur dans le processus de certitude fiscale pourrait résoudre le problème.
Cet article préconise d’accorder le droit d’imposition sur le montant A du Premier Pilier, qui couvre la portion principale des bénéfices imposables de l’économie numérique, à toutes les juridictions du marché, mais d’accorder les droits destinés aux juridictions fiscales concernées uniquement aux pays atteignant les seuils du nexus. Cette approche se traduira par une répartition équitable des droits d’imposition et garantira également qu’il n’y ait pas de charge supplémentaire dans le processus de la certitude fiscale, ce qui sera plus facile pour les pays en développement.
A New Treaty on Pandemics: Some Key Issues from a Global South Perspective
By Tamara Luciana Bustamante, Josefina del Rosario Lago, Mariana Magliolo, & Lucas Javier Segal, Facultad de Derecho, Universidad de Buenos Aires
In view of both the difficulty that negotiations on a possible new treaty will present for States of the Global South and their special needs, this paper aims to contribute by identifying and giving content to certain key issues —though not exhaustive— that should be taken into account by negotiators of a possible new treaty on pandemics or any other instrument on the subject in the future. The selected key issues are addressed through four cross-cutting questions: (i) Why is each issue relevant for the Global South, (ii) where it is currently regulated, (iii) what are the problems it entails, and (iv) how could a new instrument address them.
In October of 2020, when India and South Africa proposed a waiver from certain provisions of the TRIPS agreement, it was meant to increase local manufacturing capacity in these countries. The waiver was proposed as a tool to kick-start prevention, containment and treatment of COVID-19. While there is an imminent need to meet a growing supply-demand gap for all medical products, COVID-19 related products are urgently required in poorer nations to contain the pandemic. The waiver has an additional role to play in the larger trade schema. In enabling vaccination of populations across the globe, the waiver would be critical to normalize global trade. The paper below captures the benefits of the waiver and compares it with the existing flexibilities under the trade regime, being compulsory licensing.
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