Advanced Diploma in International Taxation (ADIT) Syllabus

Advanced Diploma in International Taxation (ADIT) Syllabus

Understanding the Advanced Diploma in International Taxation (ADIT) Syllabus is the first step in getting your ADIT certification.” ADIT is an internationally recognised professional qualification awarded by the Chartered Institute of Taxation (CIOT), UK. All professionals who want to strengthen their expertise in the field of international taxation and grasp the intricacies of various taxation systems across the States will immensely benefit from the ADIT course.

Individuals who clear the examination are eligible to apply for becoming an ‘International Tax Affiliate’ of the CIOT and use the initials “ADIT” with their names. Joining the Chartered Institute of Tax as an International Tax Affiliate will add a feather to your cap and list of professional credentials

Module 1 – Principle of International Taxation – Advanced Diploma in International Taxation (ADIT) Syllabus

I Basic principles of international tax law 20%
II Double taxation conventions (DTCs), focusing on the current version of the OECD Model Tax Convention (MTC) 30%
III Transfer pricing and thin capitalisation rules 20%
IV International tax avoidance 25%
V Miscellaneous topics

I Basic principles of international tax law

A Jurisdiction to tax, including limits to tax jurisdiction arising from public international law, and cross-border enforcement of taxes

B Taxes and tax systems

• Definition and classification of taxes
• Federal systems and local-level taxes

C State practice in exercising tax jurisdiction

• Concepts of source and situs; use of residence, domicile and citizenship as connecting factors
• State practice in determining residence of individuals and corporations
• Implications of the use of citizenship as a connecting factor (especially particular issues for US citizens)
• State practice in determining the source of income and gains
• Tax issues arising from a change of residence/citizenship

D Causes of international double taxation

• 1. Conflicts of residence and source
• 2. Conflicting definitions of connecting factors
• 3. Other causes of international double taxation (including particular issues for using citizenship as a connecting factor for taxation)

E Methods of relief from international double taxation

• Relief by credit – including indirect/underlying credit and tax sparing credit
• Relief by exemption – including participation exemption
• Practical difficulties in applying relief by credit and relief by exemption
• Relief by exemption and relief by credit compared: capital import neutrality vs.capital export neutrality
• Other methods of relief from international double taxation – relief by deduction of foreign tax; relief by deferral

F Private international law and tax

• Recognition of foreign legal entities
• Characterisation of entities as transparent or opaque – state practice
• The issue of qualification and international tax

G The history of international tax law

• Work under the League of Nations
• Work of the G20 and OECD
• Work of the UN Group of Experts

H European Union law and international tax

• EU law and double taxation conventions

I Tax and international human rights instruments

• The European Convention on Human Rights
• The International Covenant on Civil and Political Rights

J State responsibility in international tax – the development of the concept of harmful tax competition

II Double taxation conventions (DTCs), focusing on the current version of the OECD Model Tax Convention (MTC) – Advanced Diploma in International Taxation (ADIT) Syllabus

Candidates are expected to: understand the operation of the provisions of the OECD MTC; show awareness of the major points in the Commentary to the relevant Article of the OECD MTC; and be aware of key reports of the OECD Committee on Fiscal Affairs and major international cases on the topic.

A Types of DTCs (limited, multilateral etc.) and negotiation of DTCs

B DTCs and domestic law

• 1. Incorporation of DTCs into domestic law
• 2. Treaty override

C Format and structure of a DTC

• The OECD Model Tax Convention (OECD MTC) and the Commentaries to the OECD MTC – the work of the OECD Committee on Fiscal Affairs
• The UN Model Double Taxation Convention (UN MTC)
• Specific states’ models: the US MTC; the Dutch MTC
• The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI)

D Approach to the application of a DTC: applying a DTC to a concrete scenario

E Interpretation of DTCs

• General approach to interpretation
• Vienna Convention on the Law of Treaties
• Use of external aids for interpretation – the status and use of the OECD Commentaries
• Application of Article 3(2), OECD MTC
• Resolving interpretation issues by competent authority proceedings – Article 25(3), OECD MTC

F Provisions relating to the scope of a DTC: Articles. 1, 2, 29, 30, 31 and 32

• Article 1: Persons covered
• Article 2: Taxes covered
• Article 29: Entitlement to benefits
• Articles 30, 31 and 32: Territorial extension, entry into force and termination

G Key definitional provisions

• Meaning of “resident” and resolution of cases of dual residence – Article 4, OECD MTC
• Permanent establishment concept: determining the existence of a permanent establishment – Article 5, OECD MTC
• BEPS Action 7: Preventing the artificial avoidance of a permanent establishment

H DTC provisions relating to businesses

• Business profits (with or without a permanent establishment) – Article 7, OECD MTC
• Shipping and air transport profits – Article 8, OECD MTC
• Associated enterprises – Article 9, OECD MTC: status of Article 9 and link to transfer pricing legislation

I DTC provisions relating to individuals

• Employment income – Article 15, OECD MTC
• Directors’ fees – Article 16, OECD MTC
• Entertainers and sportspersons – Article 17, OECD MTC
• Pensions – Article 18, OECD MTC
• Government service – Article 19, OECD MTC
• Students – Article 20, OECD MTC

J DTC provisions relating to investment income and gains

• Income from land – Article 6, OECD MTC
• Dividends – Article 10, OECD MTC (including some consideration of the forms of dividend article used by key states, e.g. US, UK, France, Germany)
• Interest – Article 11, OECD MTC
• Royalties – Article 12, OECD MTC
• Capital gains – Article 13, OECD MTC

K Relevance of the “other income” Article – Article 21, OECD MTC

L Limitation of benefit provisions

• Approaches to the misuse of DTCs
• Abuse of law doctrines and DTCs
• State practice with respect to limitation of benefit provisions
• BEPS Action 6: treaty abuse
• Articles 1 and 29: persons covered and entitlement to benefits

M Methods of elimination of double taxation – Articles 23A and 23B, OECD MTC

N The impact of the non-discrimination article – Article 24, OECD MTC

O The resolution of disputes under DTCs

• Competent authority/mutual agreement procedures – Article 25, OECD MTC
• Alternative means of resolving international tax disputes
• BEPS Action 14: Making dispute resolution mechanisms more effective
• BEPS Action 15: Developing a multilateral instrument to modify bilateral tax treaties

P The application of DTCs to electronic commerce

• The work of the OECD Taxation Advisory Group
• E-commerce and permanent establishments

Q The digital economy

• BEPS Action 1: Tax challenges of the digital economy
• VAT/GST issues
• Nexus issues
• Definition of permanent establishments

R The work of the Platform for Collaboration on Tax

S The work of the UN Committee of Experts on International Cooperation in Tax Matters

III Transfer pricing and thin capitalisation rules – Advanced Diploma in International Taxation (ADIT) Syllabus

A Various approaches to the determination of profits of branches and associated enterprises

• Unitary taxation/global formulary apportionment
• Arm’s length approaches

B State practice with respect to transfer pricing

• Consideration of examples of domestic transfer pricing legislation (US, UK, Germany, Australia)

C Transfer pricing and DTCs – Article 9, OECD MTC

D Advanced pricing agreements

E The OECD Transfer Pricing Guidelines 2017

• Background to the introduction of the 2017 guidelines
• Major amendments to the 1995 guidelines
• Transfer pricing methodologies
• Special topics: Hard to value intangibles; low value adding intra-group services; cost contribution/ sharing agreements; revised safe harbour guidance; documentation
• Resolution of transfer pricing disputes and advance pricing agreements (APAs) 3
• Attribution of profits to permanent establishments 3

F Transfer pricing and BEPS

• Awareness of the impact of BEPS on transfer pricing
• BEPS Actions 8-10: Aligning transfer pricing outcomes with value creation
• BEPS Action 13: Documentation and country-by-country reporting

G Transfer pricing and developing countries

• The United Nations Practice Manual on Transfer Pricing for Developing Countries 2017

H State practice with respect to thin capitalisation

• Consideration of examples of thin capitalisation legislation (US, UK, Germany)

I Thin capitalisation legislation and DTCs

• BEPS Action 4: Interest Deductions

IV International tax avoidance

A Harmful tax practices

• Work of the OECD Forum on Harmful Tax Practices
• Approaches to identification of harmful tax practices, including preferential regimes and substantial activity requirements

B Domestic law approaches to international tax avoidance

• CFC and other controlled foreign entity legislation – examples from state practice
• Foreign personal holding company legislation – examples from state practice
• CFC and equivalent legislation and DTCs

C Money-laundering legislation and international tax avoidance

• Application of money-laundering legislation to foreign fiscal offences

D Co-operation between revenue authorities

• Exchange of information – Article 26, OECD MTC
• Tax information exchange agreement
• Joint investigations of taxpayers
• Co-operation in the enforcement of tax liabilities/assistance in the collection of taxes – Article 27, OECD MTC

E Conventions for administrative assistance in tax administration

• The OECD/Council of Europe Convention
• Regional arrangements for cooperation in tax administration

F Base Erosion and Profit Shifting (BEPS)

• Awareness of the scope and details of the OECD BEPS Project
• Overview of all BEPS actions (1-15)
• BEPS Action 2: Hybrid mismatches
• BEPS Action 3: CFC rules
• BEPS Action 5: Harmful tax practices
• BEPS Action 11: Measuring and monitoring BEPS
• BEPS Action 12: Mandatory disclosure rules
• BEPS Action 15: Multilateral convention to implement tax treaty-related measures to prevent BEPS

V Miscellaneous topics

A Indirect taxes and international taxation

• The origin and destination bases for indirect taxes
• GATT and GATS rules and the limitation on border tax adjustment
• WTO rules and taxes – the WTO dispute resolution regime and taxation

B Cross-border mergers

• Examination of some of the issues and solutions

C Estate and gift taxation and international issues

• The taxation issues of cross-border probate
• The OECD Model Double Taxation Convention on Estates and Inheritances

D OECD Secretariat analysis of tax treaties and the impact of the COVID-19 crisis

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