The impact of Brexit on international trade taxation

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 by Andreia Barbosa, PhD student at the Law School of UMinho

On 23 June 2016, the British people decided to leave the European Union, re-launching the idea that belonging to the European Union, in the light of Article 50 of the Treaty on European Union, does not seem to be an obligation, but a choice. States have the (unilateral) right to leave.

The actual effects of Brexit are not yet fully known. In fact, its exact consequences will only be effectively known when the negotiations are over – which will only happen, predictably, in early 2019.

There are, however, more likely scenarios than others and, consequently, more likely effects than others. Among the most immediate scenarios and effects, are those relating to the commercial transactions between the United Kingdom and the European Union. Because, of course, one of the most important ideals of the European Union is the free movement of goods, based on the existence of a single market without technical and physical frontiers in the free movement of persons, services, goods and capital­. So, the question arises as to the terms under which trade in goods between the United Kingdom and the Member States of the European Union will take place.
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The EU and the challenges of the digital economy

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 by Iva Guterres, PhD student at the University of Leeds

In 1995 Don Tapscotts coined the term Digital Economy in his book, “The Digital Economy: Promise and Peril in the Age of Networked Intelligence”. At the time, he was far for imagining just how the future would be dictated by the internet and technological development (then still in its infancy). In the meantime, the internet has become a huge part of the global economy.  Tapscotts’ book established the connection between the internet and the way economic models would change the way business was done and seen from there onwards.

At the beginning of the 1990s one major question rose on the legal landscape. What would the challenges be for global e-commerce and the tax rules or even global digital taxation? In 1996, David Tillinghast[i] wrote an article in which he questioned how traditional tax rules or policies would react to cross-border e-commerce.

Since then, history has witnessed radical changes in society and in the economy, which took Klaus Schwas, founder and chairman of the World Economic Forum, to write the book, “The fourth Industrial Revolution in 2016”.

In recent years, the EU and the OECD have been keeping an eye on business activities, especially since 2013, through the BEPS project (The Base Erosion and Profit Shifting). This was motivated by the behaviour of multinationals attempting to avoid paying tax in their home countries by taking their businesses abroad to low and no-tax jurisdictions. This generated practices and behaviors of schemes indicting aggressive fiscal planning.
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