Earning money is, and historically has been, a universal motivation for people. The pursuit of profit or financial gain can generate passion, dedication, ingenuity, as well as the willingness to undertake daunting and challenging tasks. We are not untouched from the fact that mankind has been taking leaps in achieving great heights.
Let me take you all on a ride today, not a roller coaster ride but a time machine ride. “Who was the first man to step on moon? Who was first Indian to travel in space? “Remember these questions? Remember the times when we read about Milky Way galaxy, telescopes, stars? If you have been someone like me, I am sure you would have aspired to become an astronaut.
Let’s come back to today, to our professions, to our desks, to our routines. Was the ride not a pleasant one? I am sure we all wish to go back in time. And you never know this wish could come true. Technology has always been surprising us.
We are already in the phase where Artificial Intelligence has got its grips in many fields. And just because man would stop working, does not mean there will be no taxes! Just when humans reached Moon, Stars, some reached for tax books!It is rightly said that “You can say this for death and taxes: when you are done with one, you are done with the other.”The time is not far where we could come across a robot taxing a robot? Ever imagined talking about taxing satellites, space stations? But the time is already here for us to investigate these matters.
As people like Elon Musk, Jeff Bezos, forge ahead with plans to travel into space, to the Moon, to Mars and further afield, we need to start considering how to do our jobs as accountants, or from tax perspective.
Scope:
The scope for levy taxes must be looked into. The satellite launches, extra-terrestrial travel, the international space stations, exploitation of outer space resources,all these could attract levy of taxes. Say, a country’s satellite orbiting over other countries and providing services to another country, the possibility of allowing people resident in space to control entities from there. Different nations can come together and act upon framing space laws, taxes to be levied,and penalty for violations.
Present Scenario:
Many countries are taking steps towards drafting space laws. The United Nations, OECD convention have considered these and drafted provisions for matters related to outer space. Currently the Outer Space Treaty, The Moon Agreement, The Rescue Agreement and a few others are in place. There have already been countries who have been dealing with cases addressing the issues arising with regards to space such as one nation’s spacecraft being damaged by another nation’s space debris, a few funny cases wherein a few people have claimed right over planets, moon etc.
In a case Vodacom Nigeria vs FIRS, a satellite operated by a Dutch company supplied bandwidth capacity for use in Nigeria. The bandwidth was transmitted by the Dutch company to its satellite in geo-stationary orbit which in turn transmitted the capacity to the earth station in Nigeria of a Nigerian company.The Nigerian Court of Appeal ruled that the supply was one of the services rendered in Nigeria and VATable.
Satellite acquisition and launch cost were examined by the UK Tax Tribunal in Inmarsat Global Ltd vs HMRC. The International Maritime Satellite Organization (IMSO) had bought and launched six satellites which were the subject of a sale and lease back to the IMSO. The IMSO later transferred its business to Inmarsat and accordingly the lease agreements were novated such that the satellites were leased by Inmarsat. The Tribunal concluded that Inmarsat did not qualify for capital allowances in respect of the acquisitions and launch costs because the satellites did not belong, nor were deemed to belong to Inmarsat as successor to the IMSO’s business.
The Indian perspective to such matters is also gaining limelight. In the ruling of Delhi Tribunal in Asia Satellites TelecommunicationsCo ltd, two Hong Kong owned satellites were launched into space and placed in geo stationary orbit and thesedid not use Indian orbital slots nor were they positioned over Indian airspace. The footprints of the satellites extended over several countries including India. The satellite operator entered into various agreements and agreed to provide the transponder capacity on the satellites to television broadcasters to relay their programmes to customers in India.The customers had their own relaying facilities which were not situated in India. From these facilities, the signals were beamed in space where they are received by a transponder located in the assesse’s satellite. After amplification, the signals were beamed to the footprint area of the satellites.The assesse claimed as no operations were carried out in India, no part of the income generated by it from the customers to whom the aforesaid services are provided was chargeable to tax in India. The Tribunal held that payments made for lease of transponders were royalty and not taxable in India as the satellites in which the transponders were situated, were outside India. The government later amended the definition of royalty to include transmission by satellite, whether such process is secret as part of a process.
These cases provide us a broad overview of how taxation inouter space, its related objects, services relating to it could look like. It sets a paradigm of how adaptive we need to be with the ever-changing world.
Future and the upcoming challenges:
Imagine somebody misbehaving in space and being sent back to space! There could be space inspectors like we had watched in cartoons, contacts being made with aliens and so forth. It is said that “limits of your mind, defines the boundaries of the world”. Man has always gone for things beyond his reach to keep expanding his territory. The expeditiously versatile technology seems to always open endless opportunitiesfor all of us to think out of the box and bring innovation in work, develop our skills to have an edge over others.
Although the thoughts of space taxation are in process, there are still challenges luring in this regard. Space Mining Rights, Boundary disputes, geosynchronous satellite slots, international cooperation, weapons in space, resident in space, space objects, permanent establishments in geostationary orbits are all different challenges for all the nations to ponder over. Different space laws, international cooperation, extensive research, expert opinions could all together help in addressing different issues.
The world is yet to be explored. Combining profession with the ever-fascinating world with the touches of technologycan still help us unveil different opportunities. Space taxation yet has a lot as a taxation source. To conclude the world will never stop surprising us. The universe is under no obligation to make sense to us. Sometimes its magic, even if you know how it’s done. So, sit back and await miracles. Let the universe surprise you.
The future of humanity awaits deep in space!
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