2013
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India: As Aggressive Audits Continue in India, Hopes Turn to High Courts, APA Program
Transfer pricing uncertainty has long been a fact of life for multinational companies operating in India, as businesses have had to contendwith aggressive transfer pricing audits,which have led to prolonged court disputes or difficult competent authority negotiations—or both.
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For the story, go here. (Subscription required)
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Tax Havens: Apple's Arrangement With Ireland Meets Common-Sense Tax Haven Status, Levin Says
Sen. Carl Levin (D-Mich.), chairman of the Permanent Subcommittee on Investigations, and ranking member Sen. John McCain (R-Ariz.) said May 31 that testimony by Apple Inc. executives, including Chief Executive Officer Tim Cook, corroborates that the company had a special arrangementwith the Irish government to cut its tax bill.
“Most reasonable peoplewould agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven, they said in a statement.
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“Most reasonable peoplewould agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven, they said in a statement.
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Irish Embassy Refutes Senate Tax Haven Accusations and Apple Special Tax Deal Claims
Irish Ambassador Michael Collins in a May 29 letter to the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations refuted claims in a report prepared for the panel that Ireland is a tax haven and that the Irish government negotiated a special tax dealwith Apple Inc.
For the letter, go here. (Subscription required)
For the letter, go here. (Subscription required)
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News Analysis: As American as Apple
Some senators do not admire Apple's tax planning nearly as much as consumers admire the company's products. The May 21 hearing before the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations emphasized the fact that U.S. transfer pricing rules are highly problematic. But it provided little hope that Congresswill find the motivation to do anything about them.
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For the story, go here. (Subscription required)
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More countries adopt and update GAARs to fight base erosion and profit shifting
Many countries around the globe have undergone significant change and developmentwithin the last year surrounding the use of General Anti-Avoidance Rules (GAARs). This term generally refers to a statutory rule or regime that empowers a revenue authority to deny taxpayers the benefit of an arrangement entered into for an impermissible tax-related purpose. Great variations may occur between jurisdictions as to their operation but the current impetus for these fast-moving changes is similar -- revenue authoritieswish to broaden their enforcement capabilities at this time of rising deficits and falling tax revenues throughout theworld.
For the report, go here.
For the report, go here.
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U.S. Multinationals Still Pursuing APAs With India, Practitioners Say
U.S. multinationals continue to apply for bilateral advance pricing agreements in India, despite thewidely publicized stalled relationship between the U.S. and Indian competent authorities, tax advisers said June 3.
Speaking during awebcast sponsored by her firm, Sabinewahl of PricewaterhouseCoopers India said that comments made by Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, earlier this year regarding India's APA programwere like a "cold shower" on multinational corporations' growing interest in India's APA program.
For the story, go here. (Subscription required)
Speaking during awebcast sponsored by her firm, Sabinewahl of PricewaterhouseCoopers India said that comments made by Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, earlier this year regarding India's APA programwere like a "cold shower" on multinational corporations' growing interest in India's APA program.
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Days of Double Nontaxation Are Over, Stack Says
The days of double nontaxation for multinational companies are over, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
Speaking June 3 at the 2013 OECD International Tax Conference inwashington, Stack offered a rebuttal to impressions recently conveyed to him from an "unnamed tax reporter" that the Treasury Department does not appear to be taking the OECD base erosion and profit shifting (BEPS) project seriously andwill defend the status quo.
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Speaking June 3 at the 2013 OECD International Tax Conference inwashington, Stack offered a rebuttal to impressions recently conveyed to him from an "unnamed tax reporter" that the Treasury Department does not appear to be taking the OECD base erosion and profit shifting (BEPS) project seriously andwill defend the status quo.
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Shift to Territorial System Won't Trigger a Flood of Repatriations, Gravelle Argues
Accumulated foreign profits haven't grown simply because of the tax on repatriated earnings, according to Jane Gravelle, a senior specialist in economic policy for the Congressional Research Service,who provided new evidence that a shift to a territorial system of taxationwouldn't significantly reduce the amount of accumulated foreign profits.
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For the story, go here. (Subscription required.)
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Dick Harvey: "Apple Hearing: Observations From an Expert Witness"
J. Richard (Dick) Harvey Jr., the Distinguished Professor of Practice at the Villanova University School of Law and Graduate Tax Program,was an expertwitness at the May 21 Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations hearing on Apple Inc.'s international tax planning. In this article, Harvey describes one of the arguments used by Apple and Sen. Ron Johnson, R-Wis., to justify the amount of income Apple recorded in the United States. Although Harvey disagreeswith Apple's argument, he believes that if it is accepted, it should result in Apple recording substantially more income in foreign countries other than Ireland. Harvey also questions the 30.5 percent effective tax rate advocated by Apple during the hearing and instead suggests a rate between 7 and 15 percent.
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For the story, go here. (Subscription required.)
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Tax All Profits of Companies Based in the U.S.
The fundamental question about multinationals iswhether they retain their national identity in the 21st century. From the Dutch East India Company onward multinationalswere closely identifiedwith the country that created them. However, in a globalizedworld inwhich the shareholders, production facilities and distribution centers of multinationals arewidely dispersed, it is less clear that one can identify a multinational as American.
Ideally, in such aworld each country should tax the multinational only on income arisingwithin that country. But as the Apple case shows, such a territorial system invites multinationals to shift their profits to tax havens. Avoiding that outcomewithout over- or under-taxation requires a degree of coordination among countries that is difficult to achieve.
For the story, go here.
Ideally, in such aworld each country should tax the multinational only on income arisingwithin that country. But as the Apple case shows, such a territorial system invites multinationals to shift their profits to tax havens. Avoiding that outcomewithout over- or under-taxation requires a degree of coordination among countries that is difficult to achieve.
For the story, go here.
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Protecting the corporate tax base from erosion and loopholes - Addressing profit shifting through the artificial loading of debt in Australia
On 14 May 2013 the Australian Deputy Prime Minister and Treasurer announced a package of reforms to protect the corporate tax base from erosion and loopholes.
Thisproposals paper outlines measures included in that package that address profit shifting through the artificial loading of debt in Australia.
For the paper and related news release, go here.
For additional related news releases, go here and here.
Thisproposals paper outlines measures included in that package that address profit shifting through the artificial loading of debt in Australia.
For the paper and related news release, go here.
For additional related news releases, go here and here.
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Business hit with massive tax clawback
Corporate Australiawill be slugged an extra $4.2 billion over the next four years to "protect the corporate tax base", as Labor seeks to squeeze more revenue from existing business taxes rather than introducing new imposts.
Multinational companies, miners and bankswill be among the sectors the governmentwill depend on to deliver the higher tax take,which Treasurerwayne Swan said closed loopholes and stopped big businesses gaining an unfair advantage.
For the story, go here.
Multinational companies, miners and bankswill be among the sectors the governmentwill depend on to deliver the higher tax take,which Treasurerwayne Swan said closed loopholes and stopped big businesses gaining an unfair advantage.
For the story, go here.
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Tax Treaties: OECD Tax Leader Says BEPS Project Could Produce New Multilateral Treaty
An international project on base erosion and profit shifting (BEPS) could culminate in a new multilateral treaty toautomatically revise some 3,000 existing bilateral double-tax treatiesworldwide to address BEPS, and the project could be completed in two years, the Organization for Economic Cooperation and Development's top tax official said May 30.
Pascal Saint-Amans, head of OECD's Center for Tax Policy and Administration, made his comments during OECD's annual May 29-30 ministerial council meeting,which produced a declaration urging the Committee on Fiscal Affairs, the organization's key tax decision body, to quickly complete itswork on an action plan for addressing BEPS to deliver to the Group of 20 Finance Ministers meeting July 18-19 in Moscow.
For the story, go here. (Subscription required.)
Pascal Saint-Amans, head of OECD's Center for Tax Policy and Administration, made his comments during OECD's annual May 29-30 ministerial council meeting,which produced a declaration urging the Committee on Fiscal Affairs, the organization's key tax decision body, to quickly complete itswork on an action plan for addressing BEPS to deliver to the Group of 20 Finance Ministers meeting July 18-19 in Moscow.
For the story, go here. (Subscription required.)
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Practitioner Argues Against U.N. Role in Transfer Pricing Guidance
The United Nations should get out of the business of setting international transfer pricing standards, according to David Ernick of PricewaterhouseCoopers LLP.
Speaking May 30 at a District of Columbia Bar Taxation Section luncheon on current developments in transfer pricing in India and China, Ernick, a former Treasury official, noted that the U.N. claims that its Practical Manual on Transfer Pricing for Developing Countries is consistentwith OECD guidelines.
Ifwhat the U.N. says is true, "why duplicate the effort?" Ernick asked. If, however, the U.N. guidance is inconsistentwith OECD standards, then the U.N. guidancewill result in multiple standards, double taxation, and barriers to trade and investment, argued Ernick.
For the story, go here. (Subscription required.)
Speaking May 30 at a District of Columbia Bar Taxation Section luncheon on current developments in transfer pricing in India and China, Ernick, a former Treasury official, noted that the U.N. claims that its Practical Manual on Transfer Pricing for Developing Countries is consistentwith OECD guidelines.
Ifwhat the U.N. says is true, "why duplicate the effort?" Ernick asked. If, however, the U.N. guidance is inconsistentwith OECD standards, then the U.N. guidancewill result in multiple standards, double taxation, and barriers to trade and investment, argued Ernick.
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Future U.N. Transfer Pricing Manual Likely to Address Intangibles
Future editions of the U.N. Manual on Transfer Pricing for Developing Countrieswill likely include a chapter on intangibles, a member of the committee responsible for drafting the manual said May 29.
"I assume the next membership of the committeewill consider to include some additional explanation or guidance in the area of intangibles," said Stig Sollund, a member of the U.N. Committee of Experts on International Cooperation in Tax Matters, at a meeting in New York to officially release the final version of the manual.
Sollund added that before acting on intangibles, the next Committee of Experts shouldwait to seewhat comes out of the OECD's project on base erosion and profit shifting (BEPS). Services and cross-contribution agreements could also be addressed in a future transfer pricing manual, he said.
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"I assume the next membership of the committeewill consider to include some additional explanation or guidance in the area of intangibles," said Stig Sollund, a member of the U.N. Committee of Experts on International Cooperation in Tax Matters, at a meeting in New York to officially release the final version of the manual.
Sollund added that before acting on intangibles, the next Committee of Experts shouldwait to seewhat comes out of the OECD's project on base erosion and profit shifting (BEPS). Services and cross-contribution agreements could also be addressed in a future transfer pricing manual, he said.
For the story, go here. (Subscription required.)
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Irish Official 'Absolutely Refutes' Senate Tax Haven Accusations and Apple Special Tax Deal Claims
An Irish government official on May 30 said she "absolutely refutes" recent accusations from members of a Senate subcommittee that Ireland is a tax haven and that the Irish government negotiated a special tax dealwith Apple Inc.
"There's no special tax dealwith Apple, and in fact, the CEO of Apple [Tim Cook] yesterday clarified on the record that therewere no special deals," Lucinda Creighton, Ireland's minister for European affairs, told Tax Analysts. Creighton,who is in the United States for four days to speakwith business and political leaders, spoke after an event hosted by the European Institute inwashington.
For the article, go here. (Subscription required.)
"There's no special tax dealwith Apple, and in fact, the CEO of Apple [Tim Cook] yesterday clarified on the record that therewere no special deals," Lucinda Creighton, Ireland's minister for European affairs, told Tax Analysts. Creighton,who is in the United States for four days to speakwith business and political leaders, spoke after an event hosted by the European Institute inwashington.
For the article, go here. (Subscription required.)
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OECD Official Calls for Mechanism to Quickly Implement BEPS Tax Changes
A mechanism is needed to quickly implement international tax changes related to the OECD base erosion and profit shifting (BEPS) project, an OECD official told the U.N. Economic and Social Council at a May 29 meeting in New York on international cooperation in tax matters.
Because of the sheer number of tax treaties in effect, it takes a considerable amount of time for changes to be implemented, said Marlies de Ruiter, head of the tax treaty, transfer pricing, and financial transactions division of the OECD's Centre for Tax Policy and Administration.
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Because of the sheer number of tax treaties in effect, it takes a considerable amount of time for changes to be implemented, said Marlies de Ruiter, head of the tax treaty, transfer pricing, and financial transactions division of the OECD's Centre for Tax Policy and Administration.
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Tax Reform Revenue-Neutral Corporate Tax Proposals Will Boost U.S. Economy, CEA's Krueger Says
President Obama's proposals for corporate tax reform can be done in a revenue-neutralway andwould be good for the U.S. economy,white House Council of Economic Advisers Chairman Alan Krueger told BNA May 29.
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For the story, go here. (Subscription required.)
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Economic Analysis: The Other Problem With Cost Sharing
Investors are entitled to a return on their investment.
This simple and indisputable assertion is the crux of the argument made by multiple commentators regarding the June 2012 OECD discussion draft on transfer pricing of intangibles. (The 1,013 pages of comments are available at http://www.oecd.org.) The source of their concern is the discussion draft's statement that the mere fact that a related party shares the costs of developing assets does not entitle it to the returns on that asset:
Working Party No. 6 delegates [the group of member country officials studying cross-border taxation of intangibles] are uniformly of the view that transfer pricing outcomes in cases involving intangibles should reflect the functions performed, assets used, and risks assumed by the parties. This suggests that neither legal ownership, nor the bearing of costs related to intangible development, taken separately or together, entitles an entitywithin [a multinational enterprise] group to retain the benefits or returnswith respect to the intangibleswithout more.
For the article, go here. (Subscription required.)
This simple and indisputable assertion is the crux of the argument made by multiple commentators regarding the June 2012 OECD discussion draft on transfer pricing of intangibles. (The 1,013 pages of comments are available at http://www.oecd.org.) The source of their concern is the discussion draft's statement that the mere fact that a related party shares the costs of developing assets does not entitle it to the returns on that asset:
Working Party No. 6 delegates [the group of member country officials studying cross-border taxation of intangibles] are uniformly of the view that transfer pricing outcomes in cases involving intangibles should reflect the functions performed, assets used, and risks assumed by the parties. This suggests that neither legal ownership, nor the bearing of costs related to intangible development, taken separately or together, entitles an entitywithin [a multinational enterprise] group to retain the benefits or returnswith respect to the intangibleswithout more.
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News Analysis: What Treasury Should Say to Multinationals
In news analysis, Lee A. Sheppard proposes a memorandum that Treasury should send to U.S. multinationals explaining that the international consensus on transfer pricing issues is changing.
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For the article, go here. (Subscription required.)
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News Analysis: Apple's Tax Magic
We're not easily shocked by transfer pricing practices that the U.S. government accepts, for better orworse. Google? It's pretty clean under U.S. law -- an advance pricing agreement to get the intellectual property out of the United States, and 2,000 employees in Ireland. Dell? Yawn -- lots of U.S. multinationals have commissionaire structures for selling in Europe.
But Apple's planning, as described in the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI) report, is a special case.we're talking grossworldwide revenues the size of the California state budget, and no tax being paid anywhere on a huge chunk of profits.what is truly surprising about the Apple case is its brazenness. PSI concluded that Apple's self-serving intercompany contracts had no effect on its business practices.
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But Apple's planning, as described in the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI) report, is a special case.we're talking grossworldwide revenues the size of the California state budget, and no tax being paid anywhere on a huge chunk of profits.what is truly surprising about the Apple case is its brazenness. PSI concluded that Apple's self-serving intercompany contracts had no effect on its business practices.
For the story, go here. (Subscription required.)
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To keep corporations here, fix the tax code Read more: http://www.baltimoresun.com/news/opinion/oped/bs-ed-apple-20130523,0,1325651.story#ixzz2UczWv692
The report of Apple avoiding corporate income taxes the past four years signals it's time to overhaul the U.S. corporate tax code.
Like many multinationalswith strong intellectual property, Apple legally earns nearly all of its income offshore. The U.S. tax code requires payment of corporate income taxes on domestic operations, but foreign earnings are not taxed until they are returned to the U.S. parent company, an act called repatriation. According to Senate investigators, Apple has structured its foreign operations to avoid a foreign income tax liability aswell. As a result, its foreign earningswould incur a significant repatriation tax, leading those earnings to essentially be "trapped" overseas.
For the article, go here.
Like many multinationalswith strong intellectual property, Apple legally earns nearly all of its income offshore. The U.S. tax code requires payment of corporate income taxes on domestic operations, but foreign earnings are not taxed until they are returned to the U.S. parent company, an act called repatriation. According to Senate investigators, Apple has structured its foreign operations to avoid a foreign income tax liability aswell. As a result, its foreign earningswould incur a significant repatriation tax, leading those earnings to essentially be "trapped" overseas.
For the article, go here.
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A Is for Avoidance
Even before lastweek's Senate hearing on Apple, itwas clear that the aggressive use of tax havens and other tax avoidance tactics had become standard operating procedure for global American companies.
Microsoft and Hewlett-Packardwere the focus of a similar Senate hearing last September,while Google, Amazon and Starbucks have drawn recent scrutiny in Europe. And, of course, there is General Electric,which achieved a perfect zero on its United States tax bill in 2010. In fact, G.E.was reputed to have theworld's best tax avoidance department until Apple came alongwith tactics to stash some $100 billion in Irelandwithout paying taxes on much of it anywhere in theworld and, apparently,without breaking any law.
And that is the problem. Rampant corporate tax avoidance may not be illegal, but that doesn't make it right or fair.
For the editorial, go here.
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CAPITAL IDEAS: Who Will Crack the Code?
Ireland and Singapore have no natural resources that make them obvious places to manufacture the concentrate used in soda, nor have they developed innovative new soda-making techniques. Yet they have nonetheless become global capitals for making soft-drink concentrate.
What Ireland and Singapore share is a low corporate tax rate. And because soda is such a simple product,with so much of its financial value stemming from the concentrate, Coke and Pepsi can reduce their overall tax rates by manufacturing it in low-tax countries.
For the story, go here.
What Ireland and Singapore share is a low corporate tax rate. And because soda is such a simple product,with so much of its financial value stemming from the concentrate, Coke and Pepsi can reduce their overall tax rates by manufacturing it in low-tax countries.
For the story, go here.
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Google defends taxes in face of Labour onslaught
Eric Schmidt defended Google's tax practices onwednesday and said the internet groupwould continue to invest in the UKno matterwhat after Ed Miliband, Labour leader, criticised the company for going toextraordinary lengths to avoid paying tax.
The Google executive chairman said that itwas up to governments, not companies, to set tax rules. He told the audience at the company'sBig Tent conference near London that he supported David Cameron's pledge to begin inter-governmental talks to overhaul the global tax system at next month's G8 summit.
For the story, go here.
The Google executive chairman said that itwas up to governments, not companies, to set tax rules. He told the audience at the company'sBig Tent conference near London that he supported David Cameron's pledge to begin inter-governmental talks to overhaul the global tax system at next month's G8 summit.
For the story, go here.
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Ireland pledges co-operation on global tax avoidance plan
Ireland's prime minister insisted onwednesday that his country does not cut special dealswith foreign companies to help them avoid taxes and said Dublinwill continue toworkwith the EU and international authorities to set up a global regime to fight tax avoidance.
Enda Kenny said EU authorities have not asked about Ireland's tax treatment of Apple or other multinational companies in spite of thisweek's report by US Senate investigators alleging the California-based computer group used Irish tax loopholes to avoid billions in US taxes.
For the story, go here.
Enda Kenny said EU authorities have not asked about Ireland's tax treatment of Apple or other multinational companies in spite of thisweek's report by US Senate investigators alleging the California-based computer group used Irish tax loopholes to avoid billions in US taxes.
For the story, go here.
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Apple tax probe helps drive to build consensus on global regime
The US Senate's probe of Apple's tax affairs thisweek injected renewed urgency into the global effort to crack down on aggressive tax avoidance,whichwill feature high on the agenda of the G8 summit meeting in Northern Ireland next month.
Allegations that Apple avoided billions of dollars of taxes shone a harsh spotlight on the international tax system and pushed Ireland on to the defensive after claims that the company had cut a deal to pay a 2 per cent corporate tax rate. Meanwhile British politicians renewed their attack on Google's tax planning, provoking Eric Schmidt, chairman of Google, to describe the international tax rules asirrational and express support for the global reform effort.
For the story, go here.
Allegations that Apple avoided billions of dollars of taxes shone a harsh spotlight on the international tax system and pushed Ireland on to the defensive after claims that the company had cut a deal to pay a 2 per cent corporate tax rate. Meanwhile British politicians renewed their attack on Google's tax planning, provoking Eric Schmidt, chairman of Google, to describe the international tax rules asirrational and express support for the global reform effort.
For the story, go here.
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EU rushes out corporate tax transparency law
Big companies tax affairs in Europe are to be opened up to greater public scrutinywith the EU rushing out a law compelling them to reveal corporate profits and taxes on a country-by-country basis.
Amid a political furore over allegations of tax avoidance by corporate-giants such as Apple , Starbucks and Google, the EU is extending transparency reforms for banks and resources groups to all large public and private companies.
For the story, go here.
Amid a political furore over allegations of tax avoidance by corporate-giants such as Apple , Starbucks and Google, the EU is extending transparency reforms for banks and resources groups to all large public and private companies.
For the story, go here.
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Explaining Apples Irish Tax Dodge
The outrageous part about Apple Inc. (AAPL)'s audacious tax strategies isntwhether they are legal. They maywell be. More upsetting are the ruses and contrivances that Apple (AAPL) used to pull them off.
For the story, go here.
For the story, go here.
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Not a rotten Apple
You know theworld's gone madwhen I think Rand Paul is the only onewho made sense at Tuesday's Senate grilling of Apple chief executive Tim Cook. Cook's crime? Making sure his firm pays as little in taxes as the law allows.
Paul said hewas "offended by the spectacle of dragging in executives from an American company for doing nothing illegal." If you saw the front-page headlines in every major newspaper pegged to the Permanent Subcommittee on Investigation's report, youwould be forgiven for thinking Cookwas ushered straight from the hearing to jail.
Why arewe publicly browbeating an iconic U.S. firm in an era inwhichwe should be encouraging every innovative company to locate and expand high-valuework in America?what kind of message do such hearings send to firms overseas (or U.S.-based multinationalsweighing their capital plans) about America being open for business and hungry for job-creating investment?
For the story, go here.
Paul said hewas "offended by the spectacle of dragging in executives from an American company for doing nothing illegal." If you saw the front-page headlines in every major newspaper pegged to the Permanent Subcommittee on Investigation's report, youwould be forgiven for thinking Cookwas ushered straight from the hearing to jail.
Why arewe publicly browbeating an iconic U.S. firm in an era inwhichwe should be encouraging every innovative company to locate and expand high-valuework in America?what kind of message do such hearings send to firms overseas (or U.S.-based multinationalsweighing their capital plans) about America being open for business and hungry for job-creating investment?
For the story, go here.
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The Corporate Tax Dodge
While a Senate report detailing Apple's aggressive tax sheltering of billions of dollars of overseas income grabbed headlines thisweek, little noticewas paid to a surreptitious thrust at tax minimization thatwas announced at nearly the same moment.
For the story, go here.
For the story, go here.
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Op-Ed: Here Comes the sun
Among the many things Tim Cook apparently learned at the knee of Steve Jobs, during his long tenure as Apple's No. 2,was how to create a ''reality distortion field.'' Or so itwould appear afterwatching Cook, now Apple's chief executive, testify on Tuesday at a Senate hearing on the company's tax avoidance schemes.
For the article, go here.
For the article, go here.
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The Corrosive Effect of Apples Tax Avoidance
The shameful thing about Apple Inc.'s ability to structure its business to avoid United States taxeswas not that it did it. In fact, as Apple executives tried to point out at the Senate hearing atwhich their tax strategieswere detailed, they could have chosen to pay much less in American taxes than they did.
The shameful thing is thatwe have a tax system that seems to allow multinational companies to choosewhat theywant to pay.
For the story, go here.
The shameful thing is thatwe have a tax system that seems to allow multinational companies to choosewhat theywant to pay.
For the story, go here.
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Levin Says Tax Changes Should Focus on Unjustified Breaks
Democratic Senator Carl Levin said an overhaul of the U.S. tax codewould be difficult to accomplish and instead lawmakers should focus on curbingunjustified tax breaks.
“Corporate tax reform is going to be very, very difficult if youre looking at the legitimate deductions, because there's a reason for those deductions, Levin said at a Bloomberg Government breakfast today.They serve an economic purpose so the economic interests thatwere able to get those passed, put into law, are going to fight very hard to keep those deductions.
For the story, go here.
“Corporate tax reform is going to be very, very difficult if youre looking at the legitimate deductions, because there's a reason for those deductions, Levin said at a Bloomberg Government breakfast today.They serve an economic purpose so the economic interests thatwere able to get those passed, put into law, are going to fight very hard to keep those deductions.
For the story, go here.
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Apple Tax Rate Ignores Profit Shifting Offshore
Apple Inc. (AAPL) Chief Executive Officer Tim Cook provided a figure to Congress on Tuesday that U.S. companies rarely disclose: its federal tax bill. Apple paid $6 billion last year -- a rate of 30.5 percent.
“That's more than $16 million each day, Cook said.We pay all the taxeswe owe -- every single dollar.
While nobody at the hearing questioned the figure, it provides a distorted picture of Apple's total tax burden. Based on its public filings, the company pays just under 14 percent of its income in taxesworldwide, according to Scott D. Dyreng, an assistant professor of accounting at Duke University's business schoolwhose research specializes in the actual tax rates of large U.S. companies.
For the story, go here.
“That's more than $16 million each day, Cook said.We pay all the taxeswe owe -- every single dollar.
While nobody at the hearing questioned the figure, it provides a distorted picture of Apple's total tax burden. Based on its public filings, the company pays just under 14 percent of its income in taxesworldwide, according to Scott D. Dyreng, an assistant professor of accounting at Duke University's business schoolwhose research specializes in the actual tax rates of large U.S. companies.
For the story, go here.
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Apples Tax Magic Leaves Irish Bondholders Unmoved: Euro Credit
As Ireland's leaders try to limit the fallout from the tax crossfire between Apple Inc. (AAPL) and U.S. politicians, bond markets suggest they dont have toworry.
Speaking to lawmakers in Dublin two days ago, Finance Minister Michael Noonan insisted the country is no tax haven, a day after a congressional hearing inwashington focused attention on Apple Inc.'s manoeuvers to minimize its tax bill through its operations in Cork in the south of Ireland.
“Maybe therewas a magician, said Noonan, adding that Ireland didntwant to be awhipping boy for misunderstandings over Apple's tax liabilities.But the magicianwasnt resident down in Cork.
For the story, go here.
Speaking to lawmakers in Dublin two days ago, Finance Minister Michael Noonan insisted the country is no tax haven, a day after a congressional hearing inwashington focused attention on Apple Inc.'s manoeuvers to minimize its tax bill through its operations in Cork in the south of Ireland.
“Maybe therewas a magician, said Noonan, adding that Ireland didntwant to be awhipping boy for misunderstandings over Apple's tax liabilities.But the magicianwasnt resident down in Cork.
For the story, go here.
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From Google to FedEx: The Incredible Vanishing Subsidiary
Some of the biggest U.S. companies, including Google Inc. and FedEx Corp., have quietly removed hundreds of offshore subsidiaries from their publicly disclosed financial filings over the past several years.
Software maker Oracle Corp., for instance, disclosed more than 400 subsidiaries in its 2010 annual report. By 2012 the list had beenwhittled to eight -- five ofwhichwere located in Ireland. Oracle declined to comment.
The vanishing subsidiaries don't stem from asset sales or corporate restructuring. Companies across industries say they are taking advantage of Securities and Exchange Commission rules that demand disclosure onlywhen subsidiary operations are "significant."
For the story, go here.
Software maker Oracle Corp., for instance, disclosed more than 400 subsidiaries in its 2010 annual report. By 2012 the list had beenwhittled to eight -- five ofwhichwere located in Ireland. Oracle declined to comment.
The vanishing subsidiaries don't stem from asset sales or corporate restructuring. Companies across industries say they are taking advantage of Securities and Exchange Commission rules that demand disclosure onlywhen subsidiary operations are "significant."
For the story, go here.
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Don't Blame Apple for America's Broken Tax Code
On Tuesday, Apple CEO Tim Cook testified in front of the Congressional Permanent Subcommittee on Investigations as a part of their look into the company's corporate tax practices according to Sen. Carl Levin, the chairman of the committee, "Apple successfully sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollarswhile claiming to be tax resident nowhere." I asked Mihir A. Desai, a professor and dean at Harvard Business School, a professor at Harvard Law School, and the author of a 2012 HBR article on taxing businesses, a few questions about how this investigation fits into a larger debate about the corporate tax code. Our edited conversation is below.
For the interview, go here.
For the interview, go here.
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Camp's Territorial Tax Revolution
Ways and Means Chairman Dave Camp started setting the agenda for a business tax overhaul in 2011with a discussion paper on a territorial tax. This Bloomberg Government Analysis examines Camp's proposal and the impact of a switch to a territorial system.
For the report, go here. (Subscription required.)
For the report, go here. (Subscription required.)
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Tax Fairness Tops Agenda at European Summit
Facedwith public outrage over tax-evasion scandals at a time of austerity budgets, European leaders pledgedwednesday to ensure that everybody -- from high rollers to big multinationals -- pays their fair share to cash-strapped governments.
But the small steps that leaders took at their Brussels summit underline how difficult it is to effectively fight tax evasion by individuals and tax avoidance by companies at a timewhen countries are also competing for foreign investment.
For the story, go here.
But the small steps that leaders took at their Brussels summit underline how difficult it is to effectively fight tax evasion by individuals and tax avoidance by companies at a timewhen countries are also competing for foreign investment.
For the story, go here.
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Global Firms' Tax Practices Draw U.K. Ire
The storm brewing over Apple Inc.'s tax practices in the U.S. has already rained down hard in the U.K.,where multinationals including Starbucks Corp., Amazon.com Inc. and Google Inc. have drawn public scorn for the low amounts of taxes they pay here.
Butwhile the U.K. government has pledged to take up tax avoidancewith international bodies such as the Group of Eight leading nations, little has yet been done to change the rules.
For the story, go here.
Butwhile the U.K. government has pledged to take up tax avoidancewith international bodies such as the Group of Eight leading nations, little has yet been done to change the rules.
For the story, go here.
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Push on corporate tax rules goes global
A global effort to tighten corporate tax rules is gaining momentum as politicians in Europe and the United States take aim at American tech giantswhose savvy use of international tax laws has provoked a public backlash.
A day after a U.S. Senate report slammed Apple's use of Irish regulations to minimize payments to the U.S. government, European heads of state said they hoped for quick action from an international effort to change rules that let companies shelter profits.
For the story, go here.
A day after a U.S. Senate report slammed Apple's use of Irish regulations to minimize payments to the U.S. government, European heads of state said they hoped for quick action from an international effort to change rules that let companies shelter profits.
For the story, go here.
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Robin Hood tax: A long shot
Robin Hood's modus operandiwas simple and, thanks to Hollywood, is still universally understood.when the financial crisis tipped the global economy into a steep downturn, the English folk herowas the obvious figurehead for a campaign to make the financial sector pay by taxing its day-to-day activities.
“You can draw parallels between the Sheriff of Nottingham and financial services, and Robin Hood redistributed gains back to thosewho needed them, says Simon Chouffot, spokesman for the Robin Hood Tax campaign,whichwas launched in 2010. But implementing afinancial transaction tax is far harder than robbingwicked medieval landlords.
For the story, go here.
“You can draw parallels between the Sheriff of Nottingham and financial services, and Robin Hood redistributed gains back to thosewho needed them, says Simon Chouffot, spokesman for the Robin Hood Tax campaign,whichwas launched in 2010. But implementing afinancial transaction tax is far harder than robbingwicked medieval landlords.
For the story, go here.
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..Apples Right, Corporate Income Tax Should Be Debated: Pulitzer Prize-Winnng Tax Expert
Apple (AAPL) put a fork in the traditional music industry. Then introduced the iPad, kicking off the demise of the PC market. So, could the corporate income tax system be next?
CEO Tim Cook hopes so. Hewent towashington Tuesday to defend his company's use of tax-haven subsidiaries in places like Ireland. Cook also reiterated that Apple has no plans to bring back over $100 billion in profits stashed overseas, far outside the jurisdiction of the IRS.
Perhaps Cook's star-turn in DCwill bring corporate income tax reform back into the spotlight. He suggested that the IRS should modernize the tax code. And itwasnt so long ago that both candidates for President endorsed some type of change in the corporate tax system. Many economists and tax experts, and of course CEOs, have pushed for more drastic change like eliminating the corporate income tax altogether.
“I think itwould make the system much simpler, says Pulitzer Prize-winning tax expert David Cay Johnston.
For the story, go here.
CEO Tim Cook hopes so. Hewent towashington Tuesday to defend his company's use of tax-haven subsidiaries in places like Ireland. Cook also reiterated that Apple has no plans to bring back over $100 billion in profits stashed overseas, far outside the jurisdiction of the IRS.
Perhaps Cook's star-turn in DCwill bring corporate income tax reform back into the spotlight. He suggested that the IRS should modernize the tax code. And itwasnt so long ago that both candidates for President endorsed some type of change in the corporate tax system. Many economists and tax experts, and of course CEOs, have pushed for more drastic change like eliminating the corporate income tax altogether.
“I think itwould make the system much simpler, says Pulitzer Prize-winning tax expert David Cay Johnston.
For the story, go here.
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The Apple Tax Diversion
You almost have to admire Carl Levin's timing. Amid a furor over politicized IRS tax enforcement, the Michigan Democrat on Tuesday tried to change the subject to a hardywashington perennial -- corporate tax loopholes. Too bad his designated business pinata, Apple, demonstrates instead the insanity of the tax code that Mr. Levin has done so much towrite.
Mr. Levin unveiled the results of his months-long investigation into Apple's corporate taxes and accused the American business success of employing "alchemy" and "gimmickry" to lower its tax bill.what Mr. Levin did not dowas present any evidence of anything illegal or even inappropriate. He did prove that Apple has smart accountants and tax lawyers.
For the editorial, go here.
Mr. Levin unveiled the results of his months-long investigation into Apple's corporate taxes and accused the American business success of employing "alchemy" and "gimmickry" to lower its tax bill.what Mr. Levin did not dowas present any evidence of anything illegal or even inappropriate. He did prove that Apple has smart accountants and tax lawyers.
For the editorial, go here.
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Apple Tax Bill Overstated to Investors
Apple Inc.'s real tax bill isn't as big as the one it reports to its investors.
Among the findings of an investigation by the Senate's Permanent Subcommittee on Investigations are figures that show Apple's reported taxes substantially exceed the sum it actually pays the U.S. Treasury.
For the story, go here.
Among the findings of an investigation by the Senate's Permanent Subcommittee on Investigations are figures that show Apple's reported taxes substantially exceed the sum it actually pays the U.S. Treasury.
For the story, go here.
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Ireland: No Favors Offered To Firms
The Irish government on Tuesday denied it shelters some of theworld's largest corporations, such as Apple Inc., from paying taxes, saying its long-standing low corporation tax regime is transparent and doesn't make it a tax haven.
An investigation by the U.S. Senate has revealed that, through its use of technicalities in Irish and U.S. tax law, Apple has paid little or no corporate taxes on at least $74 billion over the past four years. The investigation found no evidence that Apple did anything illegal.
The report published on Monday by the Senate's Permanent Committee on Investigations said that in Ireland, Apple "has negotiated a special corporate tax rate of less than 2%."
The Irish government said it hadn't negotiated special treatmentwith Apple or any other company.
For the story, go here.
An investigation by the U.S. Senate has revealed that, through its use of technicalities in Irish and U.S. tax law, Apple has paid little or no corporate taxes on at least $74 billion over the past four years. The investigation found no evidence that Apple did anything illegal.
The report published on Monday by the Senate's Permanent Committee on Investigations said that in Ireland, Apple "has negotiated a special corporate tax rate of less than 2%."
The Irish government said it hadn't negotiated special treatmentwith Apple or any other company.
For the story, go here.
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Apple CEO Tim Cook, Lawmakers Square Off Over Taxes .
Apple Inc.'s tax strategies came under harsh scrutiny Tuesday in the Senate,where lawmakers are finding it far easier to call for a simpler tax code than to produce one.
Tim Cook, Apple's chief executive, defended the technology giant's tax practices,which Senate investigators say have led Apple to pay no corporate taxes on tens of billions of dollars in overseas income over the past four years. He said the company pays all taxes due and argued the U.S. tax code needs a "dramatic simplification."
Mr. Cook's appearance before the Senate's Permanent Subcommittee on Investigations focused both on Apple's practices and the broader question of tax reform. One consistent complaint from large companies is that the U.S. taxes multinational companies on their global earnings,while many others tax only profits earnedwithin a country's borders. That gives U.S. companies reason to park foreign earnings overseas: They are taxed onlywhen brought back to the U.S.
For the story, go here.
Tim Cook, Apple's chief executive, defended the technology giant's tax practices,which Senate investigators say have led Apple to pay no corporate taxes on tens of billions of dollars in overseas income over the past four years. He said the company pays all taxes due and argued the U.S. tax code needs a "dramatic simplification."
Mr. Cook's appearance before the Senate's Permanent Subcommittee on Investigations focused both on Apple's practices and the broader question of tax reform. One consistent complaint from large companies is that the U.S. taxes multinational companies on their global earnings,while many others tax only profits earnedwithin a country's borders. That gives U.S. companies reason to park foreign earnings overseas: They are taxed onlywhen brought back to the U.S.
For the story, go here.
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Google Joins Apple Avoiding Taxes With Stateless Income
U.S. Senate scrutiny of Apple Inc. (AAPL)s tax strategies turned the spotlight on a unitwith $30 billion in profit since 2009 that's incorporated in Ireland, controlled by a board in California, and doesn't pay taxes in either place.
Apple officials acknowledged yesterday at a congressional hearing that the entity -- a key subsidiary in Apples offshore tax strategy -- is managed and controlled in the U.S., yet it still isnt paying U.S. federal income taxes.
The shifting of profits by multinational companies is costing the U.S. and Europe at least $100 billion per year in lost tax revenue, according to Kimberly Clausing, an economics professor at Reed University in Portland, Oregon.
For the article, go here.
Apple officials acknowledged yesterday at a congressional hearing that the entity -- a key subsidiary in Apples offshore tax strategy -- is managed and controlled in the U.S., yet it still isnt paying U.S. federal income taxes.
The shifting of profits by multinational companies is costing the U.S. and Europe at least $100 billion per year in lost tax revenue, according to Kimberly Clausing, an economics professor at Reed University in Portland, Oregon.
For the article, go here.
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Cook Defending Apple Puts Loophole-Closing Back on Agenda
A congressional hearing into Apple Inc. (AAPL)'s use of offshore tax shelters called attention to how U.S. companies lower their taxes, and underscored the difficulty Congress confrontswhen trying to end the practice.
The hearing by the Senate Permanent Subcommittee on Investigations yesterday focused on the $102 billion in assets that Apple, the most valuable U.S. technology company, has stored in offshore entities. Apple executives defended their practices,with Chief Executive Officer Tim Cook saying the company complieswith all laws and has no plans to repatriate earnings kept abroad.
For the story, go here.
The hearing by the Senate Permanent Subcommittee on Investigations yesterday focused on the $102 billion in assets that Apple, the most valuable U.S. technology company, has stored in offshore entities. Apple executives defended their practices,with Chief Executive Officer Tim Cook saying the company complieswith all laws and has no plans to repatriate earnings kept abroad.
For the story, go here.
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