1. Fiscal Barriers on the International R&D Market in the EAEU and in a Global Perspective
BRICS
Law
Institute
Andrey Savitsky,
Lead Researcher, BRICS Law Institute, Assistant Prof, PhD
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2. Agenda I. Fiscal Barriers: in Search of a Legal Concept
Non-Tariff Measures?
Breach of National Treatment?
Breach of Fundamental Economic Freedoms?
Tax Discrimination?
II. Fiscal Barriers on the EAEU R&D Market
Fiscal Barriers in the Field of Indirect Taxes
Fiscal Barriers in the Field of Corporate Tax
Fiscal Taxes in the Field of Property Taxes
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3. I. Fiscal Barriers: in Search of a Legal Concept
Fiscal Barriers as Non-Tariff Measures?
Non-tariff measures (NTM) –
“policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both” (Multi-Agency Support Team)
– the most developed concept in the International economic (trade) law – widely used in the WTO and UNCTAD documents;
The concept NTM refers mostly to the sphere of trade in goods, rather than in services;
Basic WTO documents do not strictly prohibit application of NTMs (except for XXXVII GATT 1947);
NTMs usually may take form of the other legal concepts (breach of national treatment, discrimination, etc.).
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4. I. Fiscal Barriers: in Search of a Legal Concept
2. Fiscal Barriers as a Breach of National Treatment Obligation
In the sphere of trade in goods – art. III GATT – prohibition of state protectionism (protection to domestic production – art. III(1)); prohibition of discrimination of alike foreign products (art. III(2));
In the sphere of trade in services – art. XVII GATS – prohibition of less favorable conditions [of taxation] of foreign services or providers, modifying the conditions of competition in favor of domestic services or providers.
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5. I. Fiscal Barriers: in Search of a Legal Concept
2. Fiscal Barriers as a Breach of National Treatment Obligation: the WTO DSB Case-Law
“Domestic” alcohol beverages were treated more favorably in terms of taxation compared to foreign alike beverages: shochu, soju, pisco, Canadian beer and wine, alcohol in Armenia and Ukraine, etc.;
Imposition of sales tax to foreign food products and relief for domestic alike products (Chile vs Peru);
Tax incentives with respect to vehicles, produced in Brazil (Japan vs Brazil)
– breach of national treatment under art. III(2) GATT!
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6. I. Fiscal Barriers: in Search of a Legal Concept
3. Fiscal Barriers as Breach of Fundamental Economic Freedoms
EU law refers to (1) prohibition of payments with the effect equivalent to custom duties (art. 28 TFEU); (2) prohibition of custom payments of fiscal nature (art. 30); (3) prohibition of measures with the effect equivalent to quantitative restrictions (art. 34, 35); (4) prohibition of discrimination of workers on nationality (art. 45); (5) prohibition of restriction of freedom of establishment (art. 49), of free movement of services (art. 56), free movement of capital (art. 63).
See the developments in the ECJ Case-Law: 24/68 Commission v. Italy; Diamantarbeiters; Co-Frutta; Bachmann; Avoir Fiscal; Biehl; Sandoz etc.
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7. I. Fiscal Barriers: in Search of a Legal Concept
4. Fiscal Barriers as a Forbidden Tax Discrimination
Prohibition of a nationality based discrimination in the EU (art. 18 TFEU) + own methodology of the ECJ;
Prohibition of discrimination based on grounds set forth in ECoHR and ownership clause (art. 1 Protocol) + own methodology of the ECHR;
Prohibition of tax discrimination based on nationality, place of a PE activities, residence of a creditor (art. 24 DTT).
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8. I. Fiscal Barriers: in Search of a Legal Concept
? Which concept better fits the EAEU ?
Prohibition of non-tariff measures and taxes having equal to the customs duties effect (art. 28 Treaty on EAEU);
Application of national treatment to all measures in the sphere of trade in services and establishment (pp Protocol 16 to the Treaty);
Prohibition of unjust or arbitrary discrimination or covert obstacles to trade in services;
Prohibition of tax discrimination under art. 24 DTT between Member-States.
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9. II. Fiscal Barriers on the R&D Market of the EAEU
1. Fiscal Barriers in the Field of Indirect Taxes
Exemption from VAT of equipment, materials, designated to perform R&D, imported by the Belarussian residents (art. 96(1)(1.14) TC RB);
Exemption from VAT of supply of scientific books and reviews in Kirgiz language (art. 248 TC KR);
Exemption from VAT of supplies in sphere of science, performed by a [Kirgiz] non-for-profit organization* for a fee not exceeding the costs for such supplies (art. 252 TC KR);
Exemption from VAT an R&D services by [Russian] educational and research organizations* (art. 149(2)(16) TC RF).
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10. II. Fiscal Barriers on the R&D Market of the EAEU
2. Fiscal Barriers in the Field of Corporate Tax
Belarus regards as the Belarus-sourced income any royalty or income from R&D received by a foreign organization acting without a PE (art. 146(1)(1.3) and (1.8) TC RB).
Russia exempts any income of a foreign organization acting without a PE from R&D services performed in Russia from a withholding tax (art. 309(2) TC RF).
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11. II. Fiscal Barriers on the R&D Market of the EAEU
3. Fiscal Barriers in the Field of Property Taxes
Exemption from property and land taxes of capital facilities belonging to [Belorussian] research organization* and technology parks (art. 186(1)(1.23) TC RB);
Exemption from property and land taxes of property, used in research aims by institutions founded by the only owner – all-Russian public organizations of disabled persons (art. 381, 395(5) TC RF).
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12. II. Fiscal Barriers on the R&D Market of the EAEU
? How to overcome the fiscal barriers ?
To establish a fact of the Treaty breach by the Court of EAEU?
Direct application of the Treaty by the national law enforcement bodies?
Judicial protection of rights?
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13. Շնորհակալություն ձեր ուշադրության համար: Дзякуй за ўвагу!
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Көңүл бурганыңыздарга рахмат!
Спасибо за внимание!
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