One minute with Brin Rajathurai, PSL counsel, Europe at Allen & Overy LLP.
What’s keeping you busy at work?
My current focus is on international developments and, between the EU and OECD, there has been no shortage of new initiatives and updates to keep me on my toes. On Pillar Two, you might think that once we had model rules and commentary there would be little to discuss, but as it becomes a reality, more issues are becoming apparent.
If you could make one change to a tax law or practice, what would it be?
In the words of Achim Pross of the OECD, we need a ‘decluttering’ of the tax system. I remember in the UK back in 2007 when HMRC consulted on a ‘principles-based’ approach to anti-avoidance. Fears about the uncertainty that a move away from prescriptive rules might bring were countered with the suggestion that this could herald a new dawn of simplification and a reduction in lengthy, detailed anti-avoidance legislation. Nearly two decades on, there’s still little sign of this, with new rules constantly being layered on top of existing rules. And now we are starting to see this on an international level as well, with EU and OECD measures being heaped on top of each other, multinationals being asked to jump over an ever-increasing number of hurdles and to provide mind-blowing amounts of data, with no simplification or rationalisation in sight. Perhaps we need to focus on building trust between tax authorities and taxpayers, so it can become possible to let go of at least some of these layers of rules that add complexity and compliance headaches for taxpayers without bringing any real benefit to tax authorities other than that ever-elusive peace of mind.
What advice would you give those starting out in their careers in tax?
Try not to worry about the amount that you don’t know. By all means do your best to improve your knowledge, but no-one knows everything there is to know about tax (and I would be suspicious of anyone who says they do). I think what changes as you get more experience is you deepen (and/or broaden) your understanding of what you do know and have a better idea of what it is that you don’t know. The known unknowns are considerably less scary than the unknown unknowns.
What development should we look out for later this year?
The EU’s unshell directive is one to watch. With all member states in favour of tackling the misuse of shell entities, a commission proposal adopted in December 2021, and unprecedented levels of support in the European Parliament, it looked to be a done deal.
However, as we hit 2023, rumours started circulating that the proposal was not making headway in the council, with some member states seeing unshell as a minimum standard from which member states could go further if they wished, whilst others wanted the rules to be much more limited with the focus on information reporting. Indications were that the disagreements were too fundamental to be overcome and the proposal seemed like it might be consigned to the history books.
Then, in July 2023, fresh reports emerged that the proposal was still clinging on, but potentially leaner and with less bite. With the new Spanish presidency of the council came renewed optimism as to the fate of the proposal and the expectation is that we will hear more later this year. The focus may shift towards reporting obligations as opposed to denying withholding tax relief. As we have seen with other attempts at reaching international compromise (naming no names), the final proposal may end up pleasing no-one: too weak for those who want it to have teeth, too onerous for those member states who would prefer something light-touch and yet another layer of complexity for the taxpayer.
Finally, you might not know this about me but...
Several years ago, I discovered the joys of growing my own fruit and vegetables – it feels productive and good for the soul. The highlight this year has been producing our first cauliflower, butternut squash and figs – although my children definitely prefer the raspberries and blueberries!
One minute with Brin Rajathurai, PSL counsel, Europe at Allen & Overy LLP.
What’s keeping you busy at work?
My current focus is on international developments and, between the EU and OECD, there has been no shortage of new initiatives and updates to keep me on my toes. On Pillar Two, you might think that once we had model rules and commentary there would be little to discuss, but as it becomes a reality, more issues are becoming apparent.
If you could make one change to a tax law or practice, what would it be?
In the words of Achim Pross of the OECD, we need a ‘decluttering’ of the tax system. I remember in the UK back in 2007 when HMRC consulted on a ‘principles-based’ approach to anti-avoidance. Fears about the uncertainty that a move away from prescriptive rules might bring were countered with the suggestion that this could herald a new dawn of simplification and a reduction in lengthy, detailed anti-avoidance legislation. Nearly two decades on, there’s still little sign of this, with new rules constantly being layered on top of existing rules. And now we are starting to see this on an international level as well, with EU and OECD measures being heaped on top of each other, multinationals being asked to jump over an ever-increasing number of hurdles and to provide mind-blowing amounts of data, with no simplification or rationalisation in sight. Perhaps we need to focus on building trust between tax authorities and taxpayers, so it can become possible to let go of at least some of these layers of rules that add complexity and compliance headaches for taxpayers without bringing any real benefit to tax authorities other than that ever-elusive peace of mind.
What advice would you give those starting out in their careers in tax?
Try not to worry about the amount that you don’t know. By all means do your best to improve your knowledge, but no-one knows everything there is to know about tax (and I would be suspicious of anyone who says they do). I think what changes as you get more experience is you deepen (and/or broaden) your understanding of what you do know and have a better idea of what it is that you don’t know. The known unknowns are considerably less scary than the unknown unknowns.
What development should we look out for later this year?
The EU’s unshell directive is one to watch. With all member states in favour of tackling the misuse of shell entities, a commission proposal adopted in December 2021, and unprecedented levels of support in the European Parliament, it looked to be a done deal.
However, as we hit 2023, rumours started circulating that the proposal was not making headway in the council, with some member states seeing unshell as a minimum standard from which member states could go further if they wished, whilst others wanted the rules to be much more limited with the focus on information reporting. Indications were that the disagreements were too fundamental to be overcome and the proposal seemed like it might be consigned to the history books.
Then, in July 2023, fresh reports emerged that the proposal was still clinging on, but potentially leaner and with less bite. With the new Spanish presidency of the council came renewed optimism as to the fate of the proposal and the expectation is that we will hear more later this year. The focus may shift towards reporting obligations as opposed to denying withholding tax relief. As we have seen with other attempts at reaching international compromise (naming no names), the final proposal may end up pleasing no-one: too weak for those who want it to have teeth, too onerous for those member states who would prefer something light-touch and yet another layer of complexity for the taxpayer.
Finally, you might not know this about me but...
Several years ago, I discovered the joys of growing my own fruit and vegetables – it feels productive and good for the soul. The highlight this year has been producing our first cauliflower, butternut squash and figs – although my children definitely prefer the raspberries and blueberries!
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