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Chartered Institute of Management Accountants

CIMA

The Chartered Institute of Management Accountants (CIMA), founded in 1919, is the world’s leading and largest professional body of management accountants, with members and students operating in 184 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its qualification, professional experience requirements and continuing professional development to ensure it remains the employers’ choice when recruiting financially-trained business leaders. Chartered Global Management Accountant (CGMA) is the most widely held management accounting designation in the world. It distinguishes more than 150,000 accounting and finance professionals who have advanced proficiency in finance, operations, strategy and management. The CGMA designation is underpinned by extensive global research to maintain (...)

Lobbying Activity

Response to Digital Levy

11 Feb 2021

CIMA is part of the Association of International Certified Professional Accountants alongside the AICPA. The taxation of digital transactions in a cross-border context presents several challenges to the concepts of the right to tax and the allocation of profits between countries. The challenges facing taxpayers and accounting professionals alike include: • Creates competitive disadvantages for many organizations; • Stifles business development, the return of employed capital and value creation; • Possibly imposes double taxation on value or income; • Imposes burdensome, inefficient, and costly activities, even for temporary measures. International bodies, like the OECD, have devoted considerable effort to define these challenges and develop an international consensus on the best approach to address them. Meanwhile, many individual countries over the past few years have unilaterally proposed their own solutions. In addition, the types and nature of digital transactions continue to expand. Recommendations: The Association is concerned that unilateral, cross-border taxation actions can lead to double taxation, business uncertainty and lengthy and expensive controversy for businesses and governments. The Association recommends that a consensus-based, equitable, and successfully durable rebalancing of multi-jurisdictional taxing rights have four elements: 1. Any rules extending taxation nexus to businesses that lack a physical presence in a jurisdiction should be clear, measurable, predictable, and applied consistently and neutrally across all industries and business models, and across all jurisdictions; 2. The arm’s-length standard, which is based on economic reality, is flexible enough to accommodate many of the concerns raised and provides a basis for addressing these concerns. Exceptions to the arm’s-length standard should consist solely of rules that are specific and limited in scope for attributing profits and losses to a jurisdiction. It is vital that any such rules are clear and administrable in their application and give proper regard to all value creating activities and business investment that takes place in other jurisdictions; 3. All participant Inclusive Framework jurisdictions must agree: • to adopt and fully implement the new consensus to ensure that all income is properly taxed only once across all applicable jurisdictions, and • to immediately repeal any previous unilateral actions, including temporarily enacted provisions related to digital services, whether currently in effect or pending; 4. All participant Inclusive Framework jurisdictions must include compulsory effective and practical mechanisms in their treaties and other bilateral agreements to resolve any controversy over taxing rights, such as mandatory binding arbitration, as a minimum standard subject to peer review to ensure prompt resolution of any situations potentially resulting in double taxation. Additional Reading: • AICPA Taxation of the Digitized Economy Policy Paper (Oct 2018) • AICPA Comment Letter on Key Elements Essential to Modification of International Tax System (May 2019) • AICPA Comment Letter on Pillar One and Income Allocations Between Jurisdictions (Oct 2019)
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