The Malta Institute of Taxation held its Annual Tax Conference at the Radisson Blu Golden Sands Resort & Spa, Għajn Tuffieħa. The theme of this year’s conference was ‘That was then… This is now!’ As explained by Conrad Cassar Torregiani, the institute’s president, in his opening address, the theme was chosen as the institute felt the need to draw a proverbial line in the sand and to signify that, after three years of discussion around international tax issues, loopholes in systems and the need for global reform, the time has now come to focus on the reality post BEPS.
The plenary session of the conference was opened by Kees van Raad, chairman of the International Tax Centre Leiden and director of the Leiden Advanced LLM Programme in International Tax Law. Prof. van Raad examined the need for an international tax court to address international tax disputes, and the extent to which the Court of Justice of the EU has already, or may in future, fulfill this role.
He identified the two areas in which disputes may arise – tax treaty interpretation and the application of transfer pricing legislation – and put forward his views on the alternative fora in which disputes may hypothetically be heard (a body of experts at OECD level or alternatively specialised chambers of either the CJEU or the UN International Court of Justice) and the scope for the binding or non-binding nature of determinations.
Thomas Zollo, principal with KPMG LLP (Chicago) provided an update on US tax developments and the global reaction to the developments. On the digital economy, he outlined the three avenues being considered in the context of global discussions on the taxation of the digital economy – the view that a special tax framework is required to address the digital economy; an opposing view, that the digital economy is the economy and therefore cannot be ring-fenced; and a view that the impact of the measures introduced post-BEPS should be assessed first before undertaking any further reform to the international tax system. Mr Zollo provided an insight into the US view that the digital economy cannot be ring-fenced, and the likely inclination of the US in favour of a ‘market’ approach to taxation applied in a broader context.
The second half of the plenary session was opened by Finance Minister Edward Scicluna, who provided the conference delegates with a unique insight into the behind-the-scenes work which has been undertaken over the past three years at an international level and Malta’s involvement in the process at both the EU and OECD level.
Sarah Cassar Torregiani discussed the impact of digitalisation on developments in VAT. Changes to VAT legislation have been driven by digitalisation of the economy date back to the early Noughties, and then again in 2015, with the shift of the place of taxation of e-services to the Member State of consumption. The upcoming phased implementation of further changes aims to reduce administrative burdens when selling cross-border as well as to address barriers to trade and market distortions (directive 2455/17). However, these legislative developments over the years, although significant, represent merely some of the steps toward addressing the challenges posed by digitalisation. The application of the legislation in practice and its interpretation in a manner which acknowledges, and keeps pace with, technological developments is key.
Antonio Russo, partner with Baker McKenzie Amsterdam’s award-winning Transfer Pricing Team, provided a comparative analysis of Controlled-Foreign-Company (CFC) rules and Transfer Pricing legislation, and examined the interaction between the two in practice. While both sets of rules may be characterised as anti-avoidance rules, they have different mechanisms and may not necessarily be designed to tax the same base of corporate profits. He recognised that CFC rules may at times operate as a ‘backstop’ to Transfer Pricing rules, however this is not always the case; still potentially resulting in some profit remaining untaxed. He explained how, on the other hand, the interaction of CFC and Transfer Pricing rules could result in double taxation, and observed that countries adopting CFC rules would want to weigh the far-reaching scope of its proposed rule against the potential for double taxation.
The plenary session was closed by Chris Curmi, chair of the Malta Branch of the International Fiscal Association, who introduced the association and announced its collaboration with the Malta Institute of Taxation on future initiatives.
The afternoon session was dedicated to five breakout sessions, giving the opportunity for a focused discussion of selected tax topics. Rachel Zarb Cousin, senior manager at Deloitte, and Christopher Bergedahl, assistant manager, moderated the workshop on the new mandatory disclosure obligations of tax practitioners and other ‘intermediaries’; Michail Tegos, senior manager, KPMG, presented a session on the CFC rules under ATAD and the potential effects on Malta; Mirko Rapa and Steve Gingell, both tax partners, PwC, provided an overview of the tax rules on transfers of property and shares; Antonio Russo led the workshop on Transfer Pricing and financial transactions; and Chris Borg, indirect tax principal, Deloitte, Saviour Bezzina, tax manager, EY, and Ramona Azzopardi, tax partner, WH Partners, moderated a session on VAT updates affecting eCommerce, gaming and virtual finance.
The conference came to a close with a panel discussion on the digitalisation of the economy, moderated by Conrad Cassar Torregiani, featuring a number of the conference speakers, as well as other guests, as panelists.