2013
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Tax Evasion: Apple CEO Defends Firm on Tax Payments, Tells Senate Panel No Gimmicks' Were Used
Apple Chief Executive Officer Timothy Cook told the Senate Permanent Subcommittee on Investigations that his company pays all the taxes it owes and does not engage in any gimmicks to dodge its obligations, in response to sharp questioning from Chairman Carl Levin (D-Mich.) at a May 21 hearing.We pay all the taxeswe owe. Every single dollar, Cook said at the hearing.we don't depend on tax gimmicks.
For the story, go here. (Subscription required.)
For the story, go here. (Subscription required.)
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OECD Completes Transfer Pricing Safe Harbor Guidance
The OECD's release of final guidance on transfer pricing safe harbors on May 21 sets the stage for countries to adoptworkable rules to simplify transfer pricing burdens on taxpayers, according to commentators, including Joseph Andrus, head of the OECD transfer pricing unit.
The new OECD transfer pricing safe harbor guidelines replace chapter 4, section E of the OECD's Transfer Pricing Guidelines. The new rules contain relatively few changes from a June 6, 2012, discussion draft but mark a significant shift from the OECD guidelines they replace.
For the article, go here. (Subscription required.)
The new OECD transfer pricing safe harbor guidelines replace chapter 4, section E of the OECD's Transfer Pricing Guidelines. The new rules contain relatively few changes from a June 6, 2012, discussion draft but mark a significant shift from the OECD guidelines they replace.
For the article, go here. (Subscription required.)
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Apple CEO Advocates Dramatic Reform of Corporate Tax Code
Apple Inc. CEO Tim Cook recommended at a May 21 hearing of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations that the U.S. corporate tax code be dramatically simplified.
Reform should be revenue neutralwhile eliminating corporate tax expenditures, lowering corporate income tax rates, and imposing a reasonable tax on foreign earnings thatwould allow them to be repatriated, Cook said. Apple does notwant a temporary tax holiday either, he added, saying, "A permanent change, to me, is materially better than a short-term tax holiday."
For the story, go here. (Subscription required.)
Reform should be revenue neutralwhile eliminating corporate tax expenditures, lowering corporate income tax rates, and imposing a reasonable tax on foreign earnings thatwould allow them to be repatriated, Cook said. Apple does notwant a temporary tax holiday either, he added, saying, "A permanent change, to me, is materially better than a short-term tax holiday."
For the story, go here. (Subscription required.)
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Dublin cut tax burden on multinationals after US lobbying
Dublin amended its tax code following lobbying by US industry, reducing the tax burden on multinationals that funnel royalty payments to offshore tax havens, the FT has learnt.
The changes enabled some multinational companies to make royalty payments from their Irish-based operations directly to subsidiaries based in tax havens such as Bermuda or the Cayman Islands,without having to pay a 20 per centwithholding tax on the royalties.
The changes to Ireland's tax code in July 2010 to exempt certain companies from thewithholding taxwere introduced as part of a suite of incentives to boost Ireland's attractiveness as a location for intellectual property.
For the story, go here.
The changes enabled some multinational companies to make royalty payments from their Irish-based operations directly to subsidiaries based in tax havens such as Bermuda or the Cayman Islands,without having to pay a 20 per centwithholding tax on the royalties.
The changes to Ireland's tax code in July 2010 to exempt certain companies from thewithholding taxwere introduced as part of a suite of incentives to boost Ireland's attractiveness as a location for intellectual property.
For the story, go here.
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Senate PSI posts materials related to Apple hearing
The Senate Permanent Subcommittee on Investigations (PSI) has posted on itswebsite materials related to the May 21 hearing, "Offshore Profit Shifting and the U.S. Tax Code - Part 2 (Apple Inc.)." These materials includewitness statements, a PSI memo, and a variety of documents supplied by Apple.
For the materials, go here.
For the materials, go here.
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Apple Holds Billions of Dollars in Foreign Tax Havens
An analysis of Apple Inc.'s financial reports makes clear that Apple has paid almost no income taxes to any country on its $102 billion in offshore cash holdings. That means that this cash hoard reflects profits thatwere shifted, on paper, out of countrieswhere the profitswere actually earned into foreign tax havens.
For the CTJ report, go here.
For the CTJ report, go here.
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Apple Used Tax Loopholes to Avoid $9 Billion, Senators Say
Apple Inc. Chief Executive Officer Tim Cookwill face off against U.S. senators leveling accusations the iPhone maker has created aweb of offshore entities to avoid paying billions of dollars in U.S. taxes.
Cook and two other executives -- including Chief Financial Officer Peter Oppenheimer -- appear at 9:30 a.m.washington time before a Senate panel that yesterday released a report saying the company's subsidiaries include three entities that have no home country for tax purposes.
“Applewasnt satisfiedwith shifting its profits to a low-tax offshore tax haven, Democratic Senator Carl Levin of Michigan, chairman of the Senate Permanent Subcommittee on Investigations, said at a news conference yesterday.
For the story, go here.
Cook and two other executives -- including Chief Financial Officer Peter Oppenheimer -- appear at 9:30 a.m.washington time before a Senate panel that yesterday released a report saying the company's subsidiaries include three entities that have no home country for tax purposes.
“Applewasnt satisfiedwith shifting its profits to a low-tax offshore tax haven, Democratic Senator Carl Levin of Michigan, chairman of the Senate Permanent Subcommittee on Investigations, said at a news conference yesterday.
For the story, go here.
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Apples Web of Tax Shelters Saved It Billions, Panel Finds
Even as Apple became the nation's most profitable technology company, it avoided billions in taxes in the United States and around theworld through aweb of subsidiaries so complex it spanned continents andwent beyond anything most experts had ever seen, Congressional investigators disclosed on Monday.
The investigation is expected to set up a potentially explosive confrontation between a bipartisan group of lawmakers and Timothy D. Cook, Apple's chief executive, at a public hearing on Tuesday.
Congressional investigators found that some of Apple's subsidiaries had no employees andwere largely run by top officials from the company's headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Applewas able to, in effect, make them stateless -- exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in theworld.
For the story, go here.
The investigation is expected to set up a potentially explosive confrontation between a bipartisan group of lawmakers and Timothy D. Cook, Apple's chief executive, at a public hearing on Tuesday.
Congressional investigators found that some of Apple's subsidiaries had no employees andwere largely run by top officials from the company's headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Applewas able to, in effect, make them stateless -- exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in theworld.
For the story, go here.
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Apple Avoided Taxes on Overseas Billions, Senate Panel Finds .
Apple Inc. paid no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate overwhether the U.S. tax code needs an overhaul.
The disclosure follows a lengthy examination of the technology giant's tax practices by the U.S. Senate's Permanent Subcommittee on Investigations,which is expected to air its findings at a hearing on Tuesday. Apple Chief Executive Tim Cook is preparing to testify at the hearing, and is expected to propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries.
Apple used technicalities in Irish and American tax law to pay little or no corporate taxes on at least $74 billion over the past four years, according to the Senate panel's findings. The investigation found no evidence that Apple did anything illegal. Aides to the subcommittee said they have never seen a company use a subsidiary that didn't owe corporate income taxes to any country.
For the story, go here.
The disclosure follows a lengthy examination of the technology giant's tax practices by the U.S. Senate's Permanent Subcommittee on Investigations,which is expected to air its findings at a hearing on Tuesday. Apple Chief Executive Tim Cook is preparing to testify at the hearing, and is expected to propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries.
Apple used technicalities in Irish and American tax law to pay little or no corporate taxes on at least $74 billion over the past four years, according to the Senate panel's findings. The investigation found no evidence that Apple did anything illegal. Aides to the subcommittee said they have never seen a company use a subsidiary that didn't owe corporate income taxes to any country.
For the story, go here.
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Apple Testimony for 5/21 PSI Hearing
The May 21written testimony of Apple Inc. before the US Senate Permanent Subcommittee on Investigations is now available.
For the testimony, go here.
For the testimony, go here.
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Former employee ready to expose Googles tax plans
Google's tax planning has been brandedimmoral by a former employeewho told a Sunday newspaper hewas ready to hand over evidence to the tax authority thatwould expose the company's arrangements as aconcocted scheme.
Barney Jones, a Google sales executive from 2002 to 2006,went publicwith some of the testimony behind lastweek's parliamentary hearing,which prompted Margaret Hodge, chair of the public accounts committee, to label the company asevil.
For the story, go here.
Barney Jones, a Google sales executive from 2002 to 2006,went publicwith some of the testimony behind lastweek's parliamentary hearing,which prompted Margaret Hodge, chair of the public accounts committee, to label the company asevil.
For the story, go here.
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Apple faces grilling over US tax rate
Applewould have paid a tax rate of about 15 per cent last year, far below the 25.2 per cent it reported, had it not used a form of reserve accounting that sets it apart from other big US technology companies.
The rare accounting treatment has helped to distract attention from Apple at a timewhen the tax-avoidance strategies of other cash-rich US tech companies, notably Google, have come under public attack, according to tax experts.
However, Apple's tax planning is likely to come under the microscope on Tuesdaywhen Tim Cook, chief executive, appears before the US Senate's permanent investigations subcommittee.
For the story, go here.
The rare accounting treatment has helped to distract attention from Apple at a timewhen the tax-avoidance strategies of other cash-rich US tech companies, notably Google, have come under public attack, according to tax experts.
However, Apple's tax planning is likely to come under the microscope on Tuesdaywhen Tim Cook, chief executive, appears before the US Senate's permanent investigations subcommittee.
For the story, go here.
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EU Leaders Struggling With Economic Growth to Turn to Tax Policy
European Union leaders struggling to find a consensus on how to overcome the debt crisis and revive economic growthwill use a summit meeting thisweek to focus on fighting tax evasion and on the bloc's energy policy.
The leaders of the 27-member blocwill meet in Brussels May 22 to agree on a plan governing how EU countries share tax data after finance ministers lastweek failed to reach a decision. Theyll also examine energy costs and investment, as the euro-area economy continues to be in a recession.
“In the current economic contextwe must mobilize all our policies in support of competitiveness, jobs and growth, the group said in a May 17 draft of their conclusions.
For the story, go here.
The leaders of the 27-member blocwill meet in Brussels May 22 to agree on a plan governing how EU countries share tax data after finance ministers lastweek failed to reach a decision. Theyll also examine energy costs and investment, as the euro-area economy continues to be in a recession.
“In the current economic contextwe must mobilize all our policies in support of competitiveness, jobs and growth, the group said in a May 17 draft of their conclusions.
For the story, go here.
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Apple CEO Cook to propose tax overhaul
Apple Chief Executive Tim Cook plans to propose adramatic simplification of corporate tax lawswhen he testifies for the first time before Congress nextweek, just as lawmakers are eyeing an overhaul of the tax code.
In an interview, Cook said hewill present specific proposals at a Senate hearing Tuesday to encourage companies to bring back foreign earnings to the United States and invest that money into creating jobs and research and development
“If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number, Cook said in an interview Thursday.We are not proposing that it be zero. I know many of our peers believe that. But I dont view that. But I think it has to be reasonable.
For the article, go here.
In an interview, Cook said hewill present specific proposals at a Senate hearing Tuesday to encourage companies to bring back foreign earnings to the United States and invest that money into creating jobs and research and development
“If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number, Cook said in an interview Thursday.We are not proposing that it be zero. I know many of our peers believe that. But I dont view that. But I think it has to be reasonable.
For the article, go here.
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Goldman Sachs Tax Deal Didnt Break U.K. Law, Judge Rules
Her Majesty's Revenue & Customs's decision to reduce the New York-based bank's tax billwas properly conducted, a judge in London ruled today. Still, Judge Andrew Nicol criticized tax officialswho considered the potential embarrassment to Chancellor of the Exchequer George Osborne if a dealwith Goldman Sachswasnt completed.
“The settlementwith Goldman Sachswas not a glorious episode in the history of the Revenue, Nicol said in hiswritten ruling.
For the article, go here.
“The settlementwith Goldman Sachswas not a glorious episode in the history of the Revenue, Nicol said in hiswritten ruling.
For the article, go here.
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Kleinbard: "Through a Latte, Darkly: Starbucks' Window into Stateless Income Tax Planning"
This paper uses Starbucks Corporation, the premier roaster, marketer and retailer of specialty coffee in theworld, as an example of stateless income tax planning in action.Stateless income comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group's ultimate parent company, butwhich is subject to tax only in a jurisdiction that is neither the source of the factors of production throughwhich the incomewas derived, nor the domicile of the group's parent company.
The paper reviews both Starbucks recent U.K. tax controversy (including a parliamentary inquiry),which revolved around the intersection of its consistent unprofitability in the United Kingdomwith large deductible intragroup payments to Dutch, Swiss and U.S. affiliates, and its more recent submission to the U.S. Houseways and Means Committee.
For the paper, go here.
The paper reviews both Starbucks recent U.K. tax controversy (including a parliamentary inquiry),which revolved around the intersection of its consistent unprofitability in the United Kingdomwith large deductible intragroup payments to Dutch, Swiss and U.S. affiliates, and its more recent submission to the U.S. Houseways and Means Committee.
For the paper, go here.
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ABA Meeting: BEPS Participants Staking Out Non-Arm's-Length Positions for Intangibles
In remarks he said might leave a fellow panelist less assured, Chris Bello, branch 6 chief, IRS Office of Associate Chief Counsel (International), reported that some participants in the OECD's base erosion and profit shifting (BEPS) project have called for rules thatwould disregard some intangibles transactions.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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Permanent Establishments: Treasury Official Says Separate PE Rules May Not Be Needed to Tax Digital Economy
A Treasury Department official said May 11 that separate permanent establishment rules may not be needed in order to adequately tax the profits derived from the delivery of digital goods and services.
Deputy Assistant Treasury Secretary (International Tax Affairs) Robert Stack said Treasury's initial thinking regarding the Organization for Economic Cooperation and Development's base erosion and profit shifting (BEPS) projectis that digital is not something that needs to be separately broken out and separately thought through.
For the article, go here. (Subscription required.)
Deputy Assistant Treasury Secretary (International Tax Affairs) Robert Stack said Treasury's initial thinking regarding the Organization for Economic Cooperation and Development's base erosion and profit shifting (BEPS) projectis that digital is not something that needs to be separately broken out and separately thought through.
For the article, go here. (Subscription required.)
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David Cameron: A British-American Tax and Trade Agenda
Britain and America have a proud history ofworking together to meet the great challenges of the day. Ours is a partnershipwithout parallel, rooted in our values of freedom and enterprise -- advancing not just Britain's and America's interests but the good of people around theworld.
Today, our greatest challenge is to restore strong and sustainable growth to theworld economy.
When times are tough, somewant to put the barriers up, to look inwards, and to protect themselves from theworld. But Britain and America stand for a betterway.we have a precious opportunity to transform the global economy -- not by less openness and less free trade, but by more. Andwe must do everything possible to seize it.
For the editorial, go here.
Today, our greatest challenge is to restore strong and sustainable growth to theworld economy.
When times are tough, somewant to put the barriers up, to look inwards, and to protect themselves from theworld. But Britain and America stand for a betterway.we have a precious opportunity to transform the global economy -- not by less openness and less free trade, but by more. Andwe must do everything possible to seize it.
For the editorial, go here.
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Arguments For and Against Territoriality
Reuven S. Avi-Yonah surveys the main arguments for and against territoriality and concludes that it is thewrongway to go in the short run but can perhaps be adopted in the medium to long term in conjunctionwith more fundamental international tax reform.
This article is based on keynote remarks at the American Tax Policy Institute conference on international tax reform (Rosanne Altshuler, organizer) inwashington on April 26. The conference papers can be found at http://www.americantaxpolicyinstitute.org.
For the story, go here. (Subscription required.)
This article is based on keynote remarks at the American Tax Policy Institute conference on international tax reform (Rosanne Altshuler, organizer) inwashington on April 26. The conference papers can be found at http://www.americantaxpolicyinstitute.org.
For the story, go here. (Subscription required.)
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ABA Meeting: Multinationals Must Accept BEPS Project, Stack Says
Given mounting global pressure to enact rules thatwould address the concerns raised in the OECD's base erosion and profit shifting project (BEPS), U.S. multinationals and their representatives should engage constructively, a Treasury official said on May 11. On the other hand, he emphasized that policymakers should not give in to the pressure inways that produce bad rules and bad results.
Speaking at the Foreign Lawyers session of the American Bar Association Section of Taxation Meeting inwashington, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said that the United Stateswill focus on the goal of establishing rules that make sense and eliminate stateless income. The U.S.would like to see rules that are clearly articulated by governments, understood by business, and applied broadly throughout the system, he said.
For the story, go here. (Subscription required.)
Speaking at the Foreign Lawyers session of the American Bar Association Section of Taxation Meeting inwashington, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said that the United Stateswill focus on the goal of establishing rules that make sense and eliminate stateless income. The U.S.would like to see rules that are clearly articulated by governments, understood by business, and applied broadly throughout the system, he said.
For the story, go here. (Subscription required.)
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Europe Eases Corporate Tax Dodge as Worker Burdens Rise
In early November, members of the U.K. Parliament assailed executives from Google Inc. (GOOG), Starbucks Corp. (SBUX) and Amazon.com Inc. (AMZN) for moving billions of dollars in profits into tax havens.
Less than a month later, Chancellor of the Exchequer George Osborne said hewould lower the U.K.'s corporate tax rate to 21 percent, below Germany and France, from 28 percent in 2010. A month after that, the U.K. cut the rate further, to less than 6 percent, on profit attributed to offshore arms that make loans to other units. These subsidiaries can help U.K.-based multinationals shift income to mailboxes in tax havens.
For the article, go here.
Less than a month later, Chancellor of the Exchequer George Osborne said hewould lower the U.K.'s corporate tax rate to 21 percent, below Germany and France, from 28 percent in 2010. A month after that, the U.K. cut the rate further, to less than 6 percent, on profit attributed to offshore arms that make loans to other units. These subsidiaries can help U.K.-based multinationals shift income to mailboxes in tax havens.
For the article, go here.
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Economic Analysis: Negative Foreign Effective Tax Rates
Using a detailed simulation model, economists Harry Grubert of Treasury and Rosanne Altshuler of Rutgers University have calculated that under current law, a hypothetical high-tech manufacturing investment by a U.S. multinational in a low-tax country faces a negative marginal effective tax rate.
That eye-catching resultwas one of many interesting findings in a 77-page paper presented April 26 inwashington at the international tax conference sponsored by the American Tax Policy Institute and the James A. Baker III Institute for Public Policy.
For the article, go here. (Subscription required.)
That eye-catching resultwas one of many interesting findings in a 77-page paper presented April 26 inwashington at the international tax conference sponsored by the American Tax Policy Institute and the James A. Baker III Institute for Public Policy.
For the article, go here. (Subscription required.)
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Graetz & Doud, "Technological Innovation, International Competition, and the Challenges of International Income Taxation," 113 Colum. L. Rev. 347 (2013)
Because of the importance of technological innovation to economic growth, nations strive to stimulate and attract the research and development (“R&D) that leads to that innovation and to make themselves hospitable environments for the holding of intellectual property (“IP). Tax policies have taken center stage in their efforts to accomplish these goals and to capture a share of the income from technological innovations.
This Article examines the three primary tax policies supporting innovation: (1) incentives for R&D, (2)patent boxes, and (3) tax benefits foradvanced manufacturing. It then briefly describes common techniques MNEs use to lower their taxes on IP income. The Article then assesses the various incentives and offers recommendations about how the United States might respond to challenges it now faces in promoting technological innovation. Based on extensive examination of the economic evidence, the Article concludes that, at most, only R&D incentives are justified.
This Article also summarizes the current proposals for limiting opportunities for U.S. MNEs to shift IP income to low- or zero-tax jurisdictions. In that connection, it offers proposals for change thatwould more closely align U.S. taxeswith U.S. sales.
For the paper, go here.
This Article examines the three primary tax policies supporting innovation: (1) incentives for R&D, (2)patent boxes, and (3) tax benefits foradvanced manufacturing. It then briefly describes common techniques MNEs use to lower their taxes on IP income. The Article then assesses the various incentives and offers recommendations about how the United States might respond to challenges it now faces in promoting technological innovation. Based on extensive examination of the economic evidence, the Article concludes that, at most, only R&D incentives are justified.
This Article also summarizes the current proposals for limiting opportunities for U.S. MNEs to shift IP income to low- or zero-tax jurisdictions. In that connection, it offers proposals for change thatwould more closely align U.S. taxeswith U.S. sales.
For the paper, go here.
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Senate Finance Committee Staff Tax Reform Options for Discussion
Lawmakersweighing proposals to change taxes on U.S. companies' overseas earnings have taken a look at repealing deferral for controlled foreign corporations (CFCs), according to a Senate Finance Committee document released May 9.
That paper summarized the menu of options available to members of the panel,who met behind closed doors to further discuss tax reform. The deferral proposal has come up in legislation before, in a bill offered in the last Congress by Sens. Ronwyden (D-Ore.) and Dan Coats (R-Ind.).
In addition to that proposal, members are considering tighter rules to minimize base erosion, stronger Subpart F rules, new tax treatment for non-Subpart F earnings, and further limiting cross-crediting, according to the committee document.
The committee's international tax reform options paper is at http://op.bna.com/dt.nsf/r?Open=emcy-97jmml.
That paper summarized the menu of options available to members of the panel,who met behind closed doors to further discuss tax reform. The deferral proposal has come up in legislation before, in a bill offered in the last Congress by Sens. Ronwyden (D-Ore.) and Dan Coats (R-Ind.).
In addition to that proposal, members are considering tighter rules to minimize base erosion, stronger Subpart F rules, new tax treatment for non-Subpart F earnings, and further limiting cross-crediting, according to the committee document.
The committee's international tax reform options paper is at http://op.bna.com/dt.nsf/r?Open=emcy-97jmml.
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Tax Reform: Tax Breaks Seen as Loopholes' Today Came From Previous Priorities, Treasury's Lew Says
Few politicianswill argue against tax reform, but getting down to the details of closing so-called loopholeswill be undeniably difficult, Treasury Secretary Jacob J. Lew said May 7 at the City Club of Cleveland.
The U.S. statutory tax rate is at the high end of the global scale, Lew said, but the effective tax rate puts the United States more on parwith other countries. A statutory tax rate of 28 percent,with a broader tax base,would make it more attractive for international firms to base operations and pay taxes here, Lew added.
For the article, go here. (Subscription required.)
The U.S. statutory tax rate is at the high end of the global scale, Lew said, but the effective tax rate puts the United States more on parwith other countries. A statutory tax rate of 28 percent,with a broader tax base,would make it more attractive for international firms to base operations and pay taxes here, Lew added.
For the article, go here. (Subscription required.)
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Apples Move Keeps Profit Out of Reach of Taxes
Whywould a companywith billions of dollars in the bank -- and no plans for a large investment -- decide to borrow billions more?
A decade ago, thatwas a question some short-sellerswere asking about Parmalat, the Italian food company that had seemed to be coining money.
It turned out that the answerwas not a happy one: The cashwas not real. The auditors had been fooled. A huge fraudwas being perpetrated.
Now it is a question that could be asked about Apple. Its March 30 balance sheet shows $145 billion in cash and marketable securities. But thisweek it borrowed $17 billion in the largest corporate bond offering ever.
The answer for Apple is a more comforting one for investors, if not for those of uswho pay taxes. The cash is real. But Apple has been a pioneer in tactics to avoid paying taxes to Uncle Sam. To distribute the cash to its ownerswould force it to pay taxes. So it borrows instead to buy back shares and increase its stock dividend.
For the article, go here.
A decade ago, thatwas a question some short-sellerswere asking about Parmalat, the Italian food company that had seemed to be coining money.
It turned out that the answerwas not a happy one: The cashwas not real. The auditors had been fooled. A huge fraudwas being perpetrated.
Now it is a question that could be asked about Apple. Its March 30 balance sheet shows $145 billion in cash and marketable securities. But thisweek it borrowed $17 billion in the largest corporate bond offering ever.
The answer for Apple is a more comforting one for investors, if not for those of uswho pay taxes. The cash is real. But Apple has been a pioneer in tactics to avoid paying taxes to Uncle Sam. To distribute the cash to its ownerswould force it to pay taxes. So it borrows instead to buy back shares and increase its stock dividend.
For the article, go here.
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Tax Policy: Former Treasury Official Expects OECD's BEPS Project Will Improve, Not Jettison, Existing International Tax Rules
Former Treasury Associate International Tax Counsel David Ernick,who joined PricewaterhouseCoopers in February after eight yearswith the government, talkedwith BNA April 11 about the direction of the Organization for Economic Cooperation and Development's project on base erosion and profit shifting. Ernick,whowas Treasury's principal staff attorney for transfer pricing matters and represented the United States as a delegate to the OECDworking Party No. 6, predicted the BEPS projectwill result in improvements to existing international tax standards rather than radical changes.
For the full interview, go here. (Subscription required.)
For the full interview, go here. (Subscription required.)
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Tax Treaties Concern Growing Among Multinational Firms As Senator Continues Hold on Three Treaties
Concern is growing among multinational businesses about the action taken by Sen. Rand Paul (R-Ky.) to block the Senate from voting to approve three major U.S. tax treatieswith Switzerland, Hungary, and Luxembourg,with some fearing that more tax pacts in the pipeline could stallwhen they reach the Senate.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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Australian Court Holding in Favor of Cayman Islands Partnership Elicits Surprise
The Federal Court of Australia on April 26 held in favor of a U.S. private equity firm that had invested in an Australian gold mining company, finding that the 1982 Australia-U.S. tax treaty prevented the Australian Tax Office from taxing the gain on the sale of shares in the firm -- a Cayman Islands limited partnership thatwas treated as a corporation in Australia andwas owned primarily by U.S. residents.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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News Analysis: Globalization and International Tax Rules
In news analysis, Lee A. Sheppard says international tax reform should startwith a discussion of cleaning up the current rules.
This article is an expanded version of comments to the April 26 American Tax Policy Institute international tax conference inwashington.
For the article, go here. (Subscription required.)
This article is an expanded version of comments to the April 26 American Tax Policy Institute international tax conference inwashington.
For the article, go here. (Subscription required.)
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April 2013 edition of PwC's International Tax News
International Tax News is designed to help multinational organisations
keep upwith the constant flow of international tax developments
worldwide. Among the topics featured in this month's edition are:
* The 2013 Irish Finance Bill
* The OECD's base erosion and profit sharing report
* Brazilian tax court's favourable decisionwith respect to taxation of profits generated by indirectly controlled entities
* Singapore's 2013 budget proposals
For the April 2013 edition of PwC's International Tax News, go here.
* The 2013 Irish Finance Bill
* The OECD's base erosion and profit sharing report
* Brazilian tax court's favourable decisionwith respect to taxation of profits generated by indirectly controlled entities
* Singapore's 2013 budget proposals
For the April 2013 edition of PwC's International Tax News, go here.
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March 2013 edition of PwC's International Tax News
Keeping upwith the constant flow of international tax developments
worldwide can be a challenge for multinational organisations. As a
result, PwC's International Tax network is excited to bring you a new
publication thatwill offer updates and analysis of international tax
changes around theworld. Among the topics featured in this month's
edition are:
* Germany expected to enact Company Taxation Bill shortly
* New Zealand proposes changes to the thin capitalization regime
* Final Foreign Account Tax Compliance Act (FATCA) regulations issued by the US
* China's interpretation of the capital gains article under the Singapore/China double tax agreement
For the March 2013 edition of PwC's International Tax News, go here.
* Germany expected to enact Company Taxation Bill shortly
* New Zealand proposes changes to the thin capitalization regime
* Final Foreign Account Tax Compliance Act (FATCA) regulations issued by the US
* China's interpretation of the capital gains article under the Singapore/China double tax agreement
For the March 2013 edition of PwC's International Tax News, go here.
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February 2013 edition, PwC's International Tax News
Keeping upwith the constant flow of international tax developmentsworldwide can be a challenge for multinational organisations. As a result, PwC's International Tax network is excited to bring you a new publication thatwill offer updates and analysis of international tax changes around theworld. Among the topics featured in this month's edition are:
* French Finance Act for 2013 and 3rd amnded Finance Act for 2012
* Second CJEU judgement in Franked Investment income Group Litigation
* Implementation of Taiwan's controlled foreign company (CFC) rules and place of effective management
* New Zealand signs tax treatywith Japan
For the February 2013 edition of PwC's International Tax News, go here.
* French Finance Act for 2013 and 3rd amnded Finance Act for 2012
* Second CJEU judgement in Franked Investment income Group Litigation
* Implementation of Taiwan's controlled foreign company (CFC) rules and place of effective management
* New Zealand signs tax treatywith Japan
For the February 2013 edition of PwC's International Tax News, go here.
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Companies Insist on IRS Tax Breaks While Extolling Rate Reform
Even as they praise the goal of revamping the tax code, dozens of companies and organizationswant to ensure that a rewrite doesn't come at their expense. In letters to lawmakers, companies are asking to be left alone.
“It's pretty frustrating, because theywant the best of bothworlds, said Rep. Kenny Marchant, a Texas Republican on the tax-writing Houseways and Means Committee,which is posting the letters on itswebsite.Theywant to keep all their deductions and have a lower rate.
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“It's pretty frustrating, because theywant the best of bothworlds, said Rep. Kenny Marchant, a Texas Republican on the tax-writing Houseways and Means Committee,which is posting the letters on itswebsite.Theywant to keep all their deductions and have a lower rate.
For the article, go here. (Subscription required.)
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Great tax race: Irelands policies aid business more than public
A fewweeks before Ireland unveiled its 2012 budget,which heaped $3.5bn in tax rises and spending cuts on an austerity-weary public, Ireland's top civil servants sat down privatelywith senior bankers to discuss the industry'swish list.
Itwas the morning of November 24 2011, a year after Dublinwas forced into an international bailout due to reckless speculation by its banks and chronicallyweak regulation. They met under the auspices of theClearing House, a secretive group of financial industry executives, accountants and public servants formed in 1987 to promote Dublin as a financial hub.
For the story, go here.
Itwas the morning of November 24 2011, a year after Dublinwas forced into an international bailout due to reckless speculation by its banks and chronicallyweak regulation. They met under the auspices of theClearing House, a secretive group of financial industry executives, accountants and public servants formed in 1987 to promote Dublin as a financial hub.
For the story, go here.
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OECD Document: "Draft Handbook on Transfer Pricing Risk Assessment"
In November 2011, the Steering Committee of the OECD Global Forum on Transfer Pricing undertook a project on transfer pricing risk assessment. The objective of this projectwas to produce a practical handbook that provides clear and detailed steps countries can take to assess the transfer pricing risk presented by an individual taxpayer's operations. The handbook is intended to be sufficiently detailed that it can serve as a manual for both developing and developed countries to use in conducting transfer pricing risk assessments.
The new Draft Handbook on Transfer Pricing Risk Assessment, produced by the Steering Committee of the OECD Global Forum on Transfer Pricing, is a detailed, practical resource that countries can follow in developing their own risk assessment approaches.
For the draft handbook, go here.
The new Draft Handbook on Transfer Pricing Risk Assessment, produced by the Steering Committee of the OECD Global Forum on Transfer Pricing, is a detailed, practical resource that countries can follow in developing their own risk assessment approaches.
For the draft handbook, go here.
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Zambias tax losses: Africans should join forces to combat transfer pricing
Zambia's government estimates that it is losing $2bn annually as a result of tax avoidance and transfer pricing by foreign companies on its turf equivalent to 10 per cent of gross domestic product. It is not surprising that it is taking action to staunch such losses.
For the story, go here.
For the story, go here.
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OECD International VAT/GST Guidelines (Draft Consolidated Version)
The OECD's Committee on Fiscal Affairs invites public comments on four new draft elements of the OECD International VAT/GST Guidelines (the Guidelines). These four interim drafts relate to (i) a preface to the Guidelines; (ii) the core features of VAT systems towhich the Guidelines are intended to apply, (iii) place of taxation for cross-border supplies of services and intangibles to businesses that have establishments in more than one jurisdiction, (iv) implementation of specific rules for determining the place of taxation for cross border business to business supplies of services and intangibles.
For the draft guidelines, go here.
For the draft guidelines, go here.
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PPL: Exposing the Flaws of the Foreign Tax Credit
Alan D. Viard is a resident scholar at the American Enterprise Institute. He thanks Alex Brill, Matt Jensen, Veronika Polakova, and Michael Strain for helpful comments. The views expressed in this article are solely the author's and do not reflect those of any other person or institution.
In this article, Viard explains that PPL Corp. v. Commissioner highlights the lack of a sound policy reason for the foreign tax credit's favorable treatment of foreign income taxes relative to other foreign taxes and nontax costs of earning foreign income. He argues that relief from excessive taxation of cross border investment is better achieved by eliminating corporate-level taxes on overseas income and the remaining source-based taxes on portfolio income.
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In this article, Viard explains that PPL Corp. v. Commissioner highlights the lack of a sound policy reason for the foreign tax credit's favorable treatment of foreign income taxes relative to other foreign taxes and nontax costs of earning foreign income. He argues that relief from excessive taxation of cross border investment is better achieved by eliminating corporate-level taxes on overseas income and the remaining source-based taxes on portfolio income.
For the article, go here. (Subscription required.)
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Back to the Future
Stewart Karlinsky is the executive director of the Pacific Rim Tax Institute and the Greater Zurich Area tax seminar. He lectures andwrites on the alternative minimum tax system.
In this article, Karlinsky suggests going back to the future by using a concept similar to the book untaxed reported profits adjustment to the AMT. He offers a proposal that could simplify the tax law for domestic and international transactions, significantly lower tax rates, enable repeal of the corporate AMT, and eliminate the need for subpart F and complicated transfer pricing rules.
For the article, go here. (Subscription required.)
In this article, Karlinsky suggests going back to the future by using a concept similar to the book untaxed reported profits adjustment to the AMT. He offers a proposal that could simplify the tax law for domestic and international transactions, significantly lower tax rates, enable repeal of the corporate AMT, and eliminate the need for subpart F and complicated transfer pricing rules.
For the article, go here. (Subscription required.)
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Ordering Rules Important in Applying Outbound Asset Regs
In complex reorganizations, taxpayers must consider how gain recognition rules are ordered before applying the section 367(a)(5) outbound asset transfer regulations, a Treasury official said April 30.
Speaking at a Bloomberg BNA Tax Management luncheon inwashington sponsored by Buchanan Ingersoll & Rooney PC, Brenda Zent, attorney-adviser, Treasury Office of International Tax Counsel, said a U.S. target must first consider all of the other rules underwhich it might recognize gain before applying section 367(a)(5). If gain remains after application of those rules, taxpayers should consider how an election under section 367(a)(5) might apply, she said.
For the article, go here. (Subscription required.)
Speaking at a Bloomberg BNA Tax Management luncheon inwashington sponsored by Buchanan Ingersoll & Rooney PC, Brenda Zent, attorney-adviser, Treasury Office of International Tax Counsel, said a U.S. target must first consider all of the other rules underwhich it might recognize gain before applying section 367(a)(5). If gain remains after application of those rules, taxpayers should consider how an election under section 367(a)(5) might apply, she said.
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Corporate Reorganizations: Government Trying to Stop Highly Structured Repatriation Deals in Section 367 Rules
The governmentwas trying to stop new versions of highly structured transactions it views as designed to bring cash back into the United States tax-free under final and temporary regulations (T.D. 9615) unveiled in March, officials said April 30.
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For the article, go here. (Subscription required.)
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The Role of Tax Treaties in Facilitating Development and Protecting the Tax Base
The amount of taxes paid by multinational enterprises (MNEs) in host and home countries continues to make headline news; corporate tax regimes, particularly those in many Organization for Economic Cooperation and Development countries, have never been more complex and the competition to attract and retain foreign direct investment (FDI) has perhaps never been so great.
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For the article, go here. (Subscription required.)
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Fiscal rivalry and corporate taxes
Austerity has sharpened public anger against multinational companies that seek to exploit cracks and loopholes in the international tax system. In Britain, groups such as Google and Starbucks have been the focus of voluble campaigns, and parliament has taken to browbeating corporate bosses to pay afair share.
But this cannot be the solution. Companieswill always seek to minimise their outlay so long as there are different fiscal systems and tax avoidance is not against the law. Plugging the gapswill require co-operation between countries. However, agreement on this as a new FT series on tax competition shows is sorely absent.
For the editorial, go here.
But this cannot be the solution. Companieswill always seek to minimise their outlay so long as there are different fiscal systems and tax avoidance is not against the law. Plugging the gapswill require co-operation between countries. However, agreement on this as a new FT series on tax competition shows is sorely absent.
For the editorial, go here.
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International Tax Reform Proponents Ignore Sourcing Rule Deficiencies, Critics Say
A mix of economists, accountants, and tax lawyers debated the future of international tax reform at an April 26 symposium,with critics saying that reform efforts are doomed to fail absent a serious reconstruction of the sourcing rules in the U.S. tax system.
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For the article, go here. (Subscription required.)
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Why Canada Should Adopt anInnovation Box Approach to Promote Innovation
Canada should consider adopting anInnovation Box approach to encourage business investment in innovative processes that improve productivity, growth, and incomes, according to a new report released from the C.D. Howe Institute. InImproving the Tax Treatment of Intellectual Property Income in Canada, authors Nick Pantaleo, Finn Poschmann and Scottwilkie say federal tax policy should complement tax-based support for research and development (R&D) spending by encouraging the adoption, commercialization and use of innovative ideas in short, a pull, aswell as a push, into R&D activity.
For the paper, go here.
For the paper, go here.
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PM letter to the EU on tax evasion and aggressive avoidance
The UK Prime Minister haswritten to Herman Van Rompuy, President of the European Council, setting out the case for radical global action to tackle tax evasion and aggressive tax avoidance.
For the letter, go here.
For the letter, go here.
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PM seeks global action to tackle tax avoiders
David Cameron has launched an international drive to rewrite global tax rules and force multinational companies to pay their dues. He is calling on Europe's leaders to support a four-pronged assault on the billions of pounds a year lost to exchequers.
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For the story, go here. (Subscription required.)
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Waiting for Obama
The Obama administration recently signaled to the business community that it could countenance some version of a territorial tax system for income earned abroad by U.S. businesses. Tax reform enthusiasts have seized on this perhaps a little too desperately, as evidence that reformwill occur this year. It's a thin reed, however: If any tax reform does pass Congress itwill happen in spite of, and not because of, this administration.
For the article, go here.
For the article, go here.
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