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Withholding tax in the era of BEPS, CIVs and digital economy

Subject 2 of the IFA 2018 Cahier covers “Withholding tax in the era of BEPS, CIVs and digital economy”. The focus is on the present and future of withholding tax as a means to provide for source taxation, particularly in circumstances where the manner in which a non-resident earns income does not involve and increasingly does not require, a source state “permanent establishment” (“PE”).

The general report, based on the thirty-eight branch reports received, addresses the role of withholding tax both in the domestic and in the international tax context. It identifies and compares the frameworks for withholding taxes used in various jurisdictions, taking into account both domestic and international settings. Part I of the report covers withholding tax as a means of collecting tax in the context of domestic transactions between residents. Part II deals with withholding tax as a means of protecting the tax base of the source countries. Parts III and IV address two selected types of transaction. Part IV examines the more serious challenge of the withholding tax in the digital economy. Further details from the branch reports are summarised with some practical suggestions at the end of this report.

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