Summary of IFA 59TH CONGRESS - BUENOS AIRES

I had the privilege of joining this big family of tax practitioners in Buenos Aires, Argentina during the IFA Congress. For professional reasons I had follow almost all sessions and make summaries of the discussions. As promised I want to share with the readers some core points of the congress without being to detailed. The ones interested may request to my mail the complete summary.

The following sessions were held during the congress:
Subject I: Plenary Session – Source and residence: new configuration of their principles. This included (i) Break-out Session IA – Source taxation: practical issues in determining the amount to tax and (ii) Break-out Session IB – Residence taxation: practical issues in relief of double taxation.
Subject II: Plenary Session – Tax treatment of international acquisitions of businesses.
This included (i) Break-out Session IIA – Post-acquisition restructuring and Break-out Session IIB – Tax aspects of financing the acquisitions
In addition there was also the following seminars: (A) Fundamental rights of taxpayers; (B) IFA/OECD – the definition of royalties in the OECD Model Convention; (C) Coordination of taxes in economic unions/common markets; (D) Recent developments in international tax; (E) Moving away from source taxation: re-organizing supply chains; (F) Capital gains dealing with shares of real estate companies; and a special Seminar on Perspectives of foreign investment and taxes in Argentina.
I will try to outline the best performances during the congress:

A - Source Taxation
Plenary Session - This discussion framed by the General report presented to the IFA and published in the Cahiers was very academical to some of the audience. Nevertheless, I enjoyed some remarks of the panellists. Special because there was a very evident influence of the school of supporting source taxation (probably because it was a Argentinean Congress), the discussion was political to a certain extent. I mean tax policy was on the background of the issues discussed. I was very well impressed by the comments of Prof. Reuven S. Avi-Yonah (United States), Dr Dale A.M. Pinto (Australia) and Dr Ian Roxan (United Kingdom). I personally enjoyed the discussion on (1) whether or not the jurisdiction on interest should be allocated exclusively to the State in which the enterprise, which is the debtor, carries out its business activity; and (2) whether royalties should only be taxed in the State in which the intangible property is produced rather than in the State where the intangible property is used.
Source taxation: practical issues in determining the amount to tax - Nothing very special to report (besides perhaps a funny example on deduction of expenses related to a hostage situation in Brazil).
Residence taxation: practical issues in relief of double taxation – In this break-out session I enjoyed the points raised by Prof. John Prebble (New Zealand), Stephen E. Shay (United States) and Dr Matthias Werra (Germany). In particular, Dr Werra addressed a specific situation of the deductibility of general administrative expenses and financing costs both in the situation of business conducted through a permanent establishment and through a subsidiary to question whether or not the new authorized OECD approach concerning the allocation of profits to permanent establishments would impact on the deduction of these general administrative expenses and financing costs. Prof. Prebble intervention on the relationship of the controlled foreign corporation (CFC) rules with the methods to avoid double taxation was interesting and controversial (mainly because the views expressed were not coincident with the view of several scholars).

B - International acquisitions of businesses
Unfortunately, I was not able to attend the plenary Session, which followed the General report presented to the IFA (and published in the Cahiers), consisted of different views and positions of the members of the Panel. This topic was followed by two Break-out Sessions, i.e. Break-out Session A: Post-acquisition restructuring and Break-out Session B: Tax aspects of financing the acquisitions. From comments of other congresses, I understand that this topic was well chosen and discussed. Although some people mentioned to me that the panellist tried to cover too much issues in a short time.

C - Seminars
I personally enjoyed the IFA/OECD seminar on the definition of royalties in the OECD Model Convention, the seminar on recent developments in international tax, and the seminar on capital gains dealing with shares of real estate companies. I did not attend the seminar dealing with re-organizing supply chains, but I got good reviews on the content discussed during the panel.
The IFA/OECD, considered by many as the best session of the congress, was stared by the interventions of Jacques Sasseville (OECD), Mike Waters (United Kingdom) and Michael F. Mundaca (United States). The case studies were well discussed and very practical. They demonstrated the inconsistencies of the current definition of royalties and problems of interpretation when faced with certain type of transactions.
The Seminar on recent developments in international tax was structured in three main parts, dealing with (i), US tax reform and international issues expected to be addressed by the President's Advisory Panel on Tax Reform, (ii) ECJ decision regarding the "D" case, and (iii) Selected case-law on tax treaty non-discrimination. I personally enjoyed the discussion on the controversial “D” case that dealt with the issue of MFN in Europe by Malcolm J. Gammie QC (United Kingdom) and Dennis M. Weber (Netherlands). The UK UBS case outlined by Prof. Richard J. Vann (Australia) dealing with tax treaty non-discrimination raised also interesting issues. Both cases were reported earlier in this blog.
Finally, I enjoyed the seminar, which dealt with capital gains derived from the sale of shares of real estate companies. I liked the comparative approach taken by the panellists and the novelty of some of the treaty issues concerning the application of Art. 13 of the OECD Model Treaty. The contributions of Dr Stefano Simontacchi (Italy) were very important in understanding the “ins and outs” of the interpretation of the interpretation of Art. 13(4) of the OECD Model Convention (inserted in 2003), which provides that gains from the alienation of shares of a company that holds real estate are taxable in the state where the real estate is located.