CATRC Professors Speak at International Conference in Seoul


As a part of the visit of the Central Asian Tax Research Center to Seoul on May 13, 2011, Associate Professor Tomas Balco and Assistant Professor Vladimir Tyutyurykov delivered papers at an international academic conference organized by the Law Research Institute of the School of Law at the University of Seoul.

The conference focused on the taxation of fiscally transparent entities. Fiscally transparent entities are business organizations with or without legal personality, which are not treated as separate taxpayers. Different countries have different approaches to this issue. Kazakhstan generally treats all legal entities as taxable entities. Other countries, such as the UK, USA, and most European countries treat certain entities as fiscally transparent. This means that tax liability is not assessed at the level of the entity, but at the level of the shareholders. These differing approaches can lead in practice to effective double taxation or double non-taxation. The most crucial issue is how the country of source determines the applicability of tax treaties.

To this point, Professor Balco delivered a keynote speech on the OECD approach to taxation of transparent entities, where he highlighted the fact that the OECD approach may be overly focused on the country of residence. He suggested paying attention to the treatment of partners in their country of residence and to the tax treatment of the partnership in the country of its location, should the partnership be located in another country than that of the partners.

Professor Tyutyuryukov delivered a paper on the taxation of transparent entities in Russia. The event was attended by international academics, tax consultants and lawyers. In addition to the presentations by Professors Balco and Tyutyuryukov, Prof. Jang Guang Ping, Ph.D (Law), Director of the Northeast Asia Finance and Taxation Law Research Center at Nankai University's School of Law in China, provided a Chinese perspective.  Mrs. Sunny Sunyoung Kim, an attorney from Kim & Chang, one of the best tax law firms in Korea, offered an overview of recently adopted rules on partnership taxation in her country.

The results of these discussions demonstrated how issues of partnership taxation still require the attention of researchers, practitioners and policy makers throughout the world. Kazakhstan and Russia do not have any procedural rules to establish clear guidelines on how to treat foreign transparent entities deriving income from these countries and how to apply the respective tax treaties. Similarly, most countries haven’t elaborated rules on how to treat resident shareholders who own participation interest in foreign transparent entities. CATRC will further study these issues and provide policy recommendations for Central Asian countries.