Compliance of the U.S. and Swiss Tax Reforms with WTO Rules

  • Auteur-e: Elena Kumashova
  • Catégories d'articles: Article de fond
  • Domaines juridiques: Droit fiscal international, Droit substantiel
  • Proposition de citation: Elena Kumashova, Compliance of the U.S. and Swiss Tax Reforms with WTO Rules, ASA 87 (2018/2019)
The WTO's non-discrimination obligations and subsidies disciplines have a significant effect on the set-up of direct tax measures that affect international trade in goods and services. These rules are particularly focused on the lack of even-handed treatment of domestic, import and export trade. Due to this lack of even-handiness in the treatment of domestic and export transactions the U.S. Tax Cuts and Jobs Act of 2017 fails to comply with the GATT 1994 and the WTO disciplines on subsidies. The Swiss patent box regime, on the other hand, does not differentiate between the export and domestic income sources. This neutrality ensures its compliance with the WTO rules.

Content

  • 1. Introduction
  • 2. WTO Rules Relevant for Tax Measures
  • 3. Compatibility of the U.S. Tax Reform with WTO Rules
  • 3.1. Foreign Derived Intangible Income – a Prohibited Subsidy under the SCM Agreement
  • 3.1.1. Government Revenue Otherwise Due Is Foregone
  • 3.1.1.1. Identification of the Relevant Benchmark
  • 3.1.1.2. Comparison with the Benchmark and Analysis of Objective Reasons
  • 3.1.2. Benefit
  • 3.1.3. Export Contingency
  • 3.1.4. Does the FDII Fall Outside the Scope of the SCM Agreement?
  • 3.2. Base Erosion and Anti-abuse Tax
  • 3.2.1. The Structure of the Base Erosion and Anti-abuse Tax
  • 3.2.2. BEAT on Depreciation Deductions and Purchase of Raw Materials and Other Products by Inverted Companies
  • 3.2.2.1. «Affecting» Requirement
  • 3.2.2.2. The «Likeness» Requirement
  • 3.2.2.3. Less Favorable Treatment
  • 3.2.3. BEAT on Payments for Services to Related Foreign Parties
  • 3.2.4. Can the BEAT be Justified as a Measure Aimed at Avoiding Tax Base Erosion and Profit Shifting?
  • 3.2.4.1. Base Erosion and Profit Shifting: Normative Benchmark
  • 3.2.4.2. Comparison of the BEAT with the BEPS Normative Benchmark
  • 4. Compatibility of the Swiss Tax Reform with WTO Rules
  • 4.1. The Patent Box under the Swiss Tax Reform
  • 4.2. Compatibility of the Patent Box with the SCM Agreement
  • 4.2.1. Specificity under Article 2.1 SCM Agreement
  • 4.2.2. Specificity under Article 2.2 SCM Agreement
  • 5. Conclusion