Int'l Tax News
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Digital Permanent Establishment (Digital PE): A Road Ahead forE-commerce Taxation
by Sagarwagh (Academia.edu)
With nations all over theworld raising concerns over tax avoidance duewidespread e-commerce transactions, it is essential to analyze the shortcomings in the existing law and find practical solutions to plug the issue of revenue leakage.
Any domestic tax statute gets the teeth to impose tax on the people (taxpayers) by the virtue ofcharging section in the tax statute. The primary requirement to be fulfilled by a contracting state for putting a particular transaction to taxwhether domestic or cross-border is to define the incidence and scope of charging section in its domestic tax law. This means that, the contracting state should provide for express provisions in its domestic tax statue in respect taxation system it has adopted (i.e. Incidence of tax / jurisdiction to tax–territorial orworldwide residence taxation).
In case of cross–border transactions, especially the ones inwhich the income arises in contracting state to resident of other contracting state, the domestic tax laws of the contracting state define the degree up towhich the contracting state seeks to levy charge of tax on resident ofother contracting state. The provisions of this nature can be termed scope provisions.
This research paperwill first analyze the existing legal provisions in relation to e-commerce taxation and need of Digital Permanent Establishment (Digital PE), and then suggest proposedlegal framework both in municipal (domestic) laws of countries and treaties to subject e-commerce transaction to taxation in source jurisdictions through constitution of Digital PE.
For the paper, go here.
With nations all over theworld raising concerns over tax avoidance duewidespread e-commerce transactions, it is essential to analyze the shortcomings in the existing law and find practical solutions to plug the issue of revenue leakage.
Any domestic tax statute gets the teeth to impose tax on the people (taxpayers) by the virtue ofcharging section in the tax statute. The primary requirement to be fulfilled by a contracting state for putting a particular transaction to taxwhether domestic or cross-border is to define the incidence and scope of charging section in its domestic tax law. This means that, the contracting state should provide for express provisions in its domestic tax statue in respect taxation system it has adopted (i.e. Incidence of tax / jurisdiction to tax–territorial orworldwide residence taxation).
In case of cross–border transactions, especially the ones inwhich the income arises in contracting state to resident of other contracting state, the domestic tax laws of the contracting state define the degree up towhich the contracting state seeks to levy charge of tax on resident ofother contracting state. The provisions of this nature can be termed scope provisions.
This research paperwill first analyze the existing legal provisions in relation to e-commerce taxation and need of Digital Permanent Establishment (Digital PE), and then suggest proposedlegal framework both in municipal (domestic) laws of countries and treaties to subject e-commerce transaction to taxation in source jurisdictions through constitution of Digital PE.
For the paper, go here.
Posted on
Cross-Border Taxation: OECD Draft Aims to Clarify Tax Treatment Of Employment-Termination Payments
by Rick Mitchell (Bloomberg, Daily Tax Report)
The Organization for Economic Cooperation and Development June 25 released a discussion draft aimed at clarifying the tax treaty treatment of various cross-border payments made following the termination of employment.
The organization said commentary for the OECD Model Tax Convention on Income and Capital currently has limited guidance on such payments, and deals exclusivelywith the extent towhich they constitutepensions or other similar remuneration.
For the story, go here. (Subscription required)
The Organization for Economic Cooperation and Development June 25 released a discussion draft aimed at clarifying the tax treaty treatment of various cross-border payments made following the termination of employment.
The organization said commentary for the OECD Model Tax Convention on Income and Capital currently has limited guidance on such payments, and deals exclusivelywith the extent towhich they constitutepensions or other similar remuneration.
For the story, go here. (Subscription required)
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Delaney's Delusion -- Latest Proposed Tax Amnesty for Repatriated Offshore Profits Would Create Infrastructure Bank Run by Corporate Tax Dodgers
by Citizens for Tax Justice (website)
Congressman John Delaney, a Democrat from Maryland, has proposed to allow American corporations to bring a limited amount of offshore profits back to the U.S. (torepatriate these profits)without paying the U.S. corporate tax thatwould normally be due. This type of tax amnesty for repatriated offshore profits is euphemistically called arepatriation holiday by its supporters. The Congressional Research Service has found that a similar proposal enacted in 2004 provided no benefit for the economy and that many of the corporations that participated actually reduced employment.
For the report, go here.
Congressman John Delaney, a Democrat from Maryland, has proposed to allow American corporations to bring a limited amount of offshore profits back to the U.S. (torepatriate these profits)without paying the U.S. corporate tax thatwould normally be due. This type of tax amnesty for repatriated offshore profits is euphemistically called arepatriation holiday by its supporters. The Congressional Research Service has found that a similar proposal enacted in 2004 provided no benefit for the economy and that many of the corporations that participated actually reduced employment.
For the report, go here.
Posted on
Country-by-Country Tax Information Should Be Confidential, Treasury Officials Say
by David D. Stewart (Tax Analysts, Tax Notes Today)
With both the G-8 and the OECD's base erosion and profit shifting (BEPS) project examining expanded country-by-country reporting by multinationals, Treasury officials say the tax information should not be made available to the public.
While transparency is an important issue, it must "be set in an appropriate context," Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said at a June 25 District of Columbia Bar Association Taxation Section international tax luncheon.
For the story, go here. (Subscription required)
With both the G-8 and the OECD's base erosion and profit shifting (BEPS) project examining expanded country-by-country reporting by multinationals, Treasury officials say the tax information should not be made available to the public.
While transparency is an important issue, it must "be set in an appropriate context," Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said at a June 25 District of Columbia Bar Association Taxation Section international tax luncheon.
For the story, go here. (Subscription required)
Posted on
Through a Latte, Darkly: Starbucks' Window into Stateless Income Tax Planning
by Edward D. Kleinbard (Social Science Research Network)
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. The paper draws from this review two lessons.
First, if Starbucks can organize itself as a successful stateless income generator, any multinational firm can.
Second, The Starbucks story in particular, its U.K. experience demonstrates the fundamental opacity of international tax planning, inwhich neither investors in a public firm nor the tax authorities in any particular jurisdiction have a clear picture ofwhat the firm is up to.
For the paper, go here.
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. The paper draws from this review two lessons.
First, if Starbucks can organize itself as a successful stateless income generator, any multinational firm can.
Second, The Starbucks story in particular, its U.K. experience demonstrates the fundamental opacity of international tax planning, inwhich neither investors in a public firm nor the tax authorities in any particular jurisdiction have a clear picture ofwhat the firm is up to.
For the paper, go here.
Posted on
Keep It Simple, Stupid: The Key to Tax Reform
by Martin Lobel (Tax Analysts, Tax Notes Today)
Martin Lobel, a partner at Lobel Novins & Lamont LLP and chair of Tax Analysts' board of directors, argues that the United States must strengthen and simplify the tax code to provide a broad tax base before carving out new loopholes to "reform" the code.
The views expressed herein are solely the author's and do not necessarily reflect the views of Tax Analysts.
For the viewpoint, go here. (Subscription required.)
Martin Lobel, a partner at Lobel Novins & Lamont LLP and chair of Tax Analysts' board of directors, argues that the United States must strengthen and simplify the tax code to provide a broad tax base before carving out new loopholes to "reform" the code.
The views expressed herein are solely the author's and do not necessarily reflect the views of Tax Analysts.
For the viewpoint, go here. (Subscription required.)
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A Closer Look at the New Competent Authority Council
by Marie Sapirie (Tax Analysts, Tax Notes Today)
Competent authorities in the 43 OECD Forum on Tax Administration (FTA) member stateswill soon have a new avenue to discuss issues before they encounter them in the context of a mutual agreement procedure (MAP). The new forumwill be an exercise in intergovernmental cooperation that could make the process of resolving MAP disputes more efficient.
The FTA MAP forumwill be organized under the auspices of the FTA. Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, recently emphasized the importance of the FTA as a multilateral body and the plans for increased coordination of tax administration among its members. The forumwill be open to all the members of the FTA,which includes countries that are not OECD members, said Jonathan Leigh Pemberton of the OECD Centre for Tax Policy and Administration.
For the story, go here. (Subscription required.)
Competent authorities in the 43 OECD Forum on Tax Administration (FTA) member stateswill soon have a new avenue to discuss issues before they encounter them in the context of a mutual agreement procedure (MAP). The new forumwill be an exercise in intergovernmental cooperation that could make the process of resolving MAP disputes more efficient.
The FTA MAP forumwill be organized under the auspices of the FTA. Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, recently emphasized the importance of the FTA as a multilateral body and the plans for increased coordination of tax administration among its members. The forumwill be open to all the members of the FTA,which includes countries that are not OECD members, said Jonathan Leigh Pemberton of the OECD Centre for Tax Policy and Administration.
For the story, go here. (Subscription required.)
Posted on
Economic Analysis: New Corporate Coalition Accepts That Reform Won't Be Painless
by Martin A. Sullivan (Tax Analysts, Tax Notes Today)
Therewas a time not long agowhen corporate America hoped it could have it all. Itwould lobby for a corporate rate cut and a territorial system and let somebody elseworry about footing the bill. Andwhy shouldn't business think thatway? After all, President Georgew. Bush pushed through huge individual tax rate cuts in 2001 and capital gains and dividend rate cuts in 2003without paying for them.
But then a series of events transformed the prospect of revenue-losing corporate tax reform from difficult to near impossible. It beganwith the financial crisis that plunged the economy into a deep recession and triggered skyrocketing deficits.
On June 4 a group of 42 U.S. corporations formed the Alliance for Competitive Taxation (ACT). This group has fully embraced the new realistic approach to corporate tax reform. According to itswebsite: "After studying this for over two years, our members understand that to fully pay for a more competitive tax system requires sacrificing specific tax breaks they currently benefit from and tough rules to protect the U.S. tax base."
For the article, go here. (Subscription required)
Therewas a time not long agowhen corporate America hoped it could have it all. Itwould lobby for a corporate rate cut and a territorial system and let somebody elseworry about footing the bill. Andwhy shouldn't business think thatway? After all, President Georgew. Bush pushed through huge individual tax rate cuts in 2001 and capital gains and dividend rate cuts in 2003without paying for them.
But then a series of events transformed the prospect of revenue-losing corporate tax reform from difficult to near impossible. It beganwith the financial crisis that plunged the economy into a deep recession and triggered skyrocketing deficits.
On June 4 a group of 42 U.S. corporations formed the Alliance for Competitive Taxation (ACT). This group has fully embraced the new realistic approach to corporate tax reform. According to itswebsite: "After studying this for over two years, our members understand that to fully pay for a more competitive tax system requires sacrificing specific tax breaks they currently benefit from and tough rules to protect the U.S. tax base."
For the article, go here. (Subscription required)
Posted on
Economic Analysis: The 3-Way Tug of War for Intangible Profits
by Martin A. Sullivan (Tax Analysts, Tax Notes Today)
Let's keep it simple. There are basically three approaches to taxing intangible profits. They can be taxedwhere intangibles are developed,where products are sold, orwhere the costs of intangible development are funded.
Because the three approaches havewidely different implications for the distribution of corporate tax revenue among governments and for theworldwide effective tax rates paid by corporations, international tax reform cannot really proceed until tough choices are made. At the Houseways and Means Committee hearing on June 13, all three approaches received a lot of attention. Unfortunately for thosewho like to be optimistic about the prospects for tax reform, the hearing clarified that sharp differences of opinion remain on the critical issue ofwhere intangible income should be subject to tax.
For the article, go here. (Subscription required.)
Let's keep it simple. There are basically three approaches to taxing intangible profits. They can be taxedwhere intangibles are developed,where products are sold, orwhere the costs of intangible development are funded.
Because the three approaches havewidely different implications for the distribution of corporate tax revenue among governments and for theworldwide effective tax rates paid by corporations, international tax reform cannot really proceed until tough choices are made. At the Houseways and Means Committee hearing on June 13, all three approaches received a lot of attention. Unfortunately for thosewho like to be optimistic about the prospects for tax reform, the hearing clarified that sharp differences of opinion remain on the critical issue ofwhere intangible income should be subject to tax.
For the article, go here. (Subscription required.)
Posted on
News Analysis: Hazards of Debt Push-Downs
By Lee A. Sheppard (Tax Analysts, Tax Notes Today)
What are American multinationals really good at? Tax avoidance --that's obvious. Getting ordinary people to upload personal information for sale to advertisers -- check. Overpaying their top executives -- check.
But there's another dubious skill that they're internationally known for: buying and selling companies. Sometimes they argue against tax measures on the ground that some mythical European competitor might beat them to an acquisition.
On June 20 the International Tax Institute explored the tax obstacles to loading target companieswith acquisition debt towash out their locally taxable income -- a time-honored acquisition technique. Although the United States has interest deduction restrictions that are honored in the breach, European governments are exercised about debt push-down and are adopting measures to restrict interest deductions.
For the article, go here. (Subscription required)
What are American multinationals really good at? Tax avoidance --that's obvious. Getting ordinary people to upload personal information for sale to advertisers -- check. Overpaying their top executives -- check.
But there's another dubious skill that they're internationally known for: buying and selling companies. Sometimes they argue against tax measures on the ground that some mythical European competitor might beat them to an acquisition.
On June 20 the International Tax Institute explored the tax obstacles to loading target companieswith acquisition debt towash out their locally taxable income -- a time-honored acquisition technique. Although the United States has interest deduction restrictions that are honored in the breach, European governments are exercised about debt push-down and are adopting measures to restrict interest deductions.
For the article, go here. (Subscription required)
Posted on
Cadbury: The great tax fudge
By Jonathan Ford, Sally Gainsbury and Vanessa Houlder (Financial Times)
Itwas a deal that provoked visceral reactions in Britain. Even before Kraft completed its contentious £11.5bn purchase of Cadbury three years ago, politicianswerewarning the US group against trying to make afast buck out of the UK confectioner.
Painted as a cost-crunching manufacturer ofplastic cheese, the US conglomeratewas seen as a threat not only to Cadbury's unique British heritage but also to its tax contributions.
Theworst fears of critics appeared to be realised just months after the dealwhen it emerged that the new owner (renamed Mondelez following a 2011 demerger)would reorganise Cadbury inways that ensured it paid little or no tax in Britain.
Kraft planned to shift Cadbury's management and purchasing activities offshore to its European headquarters in low-tax Switzerland, leaving the UK operation as little more than a shell, ladenwith £8bn of debt.
Newspapers claimed that £60m of annual tax paymentswould be lost and politicianswere incensed.The publicwill say that this is just tax avoidance and the publicwill be right, said Lindsay Hoyle, the deputy speaker of the House of Commons.
But the truth is that HM Revenue & Customs had little to lose from the deal. As a Financial Times review of Cadbury's tax affairs has discovered, the chocolate maker paid an average of £6.4m a year in current UK tax on its operations in the decade before the takeover.
For the story, go here.
Itwas a deal that provoked visceral reactions in Britain. Even before Kraft completed its contentious £11.5bn purchase of Cadbury three years ago, politicianswerewarning the US group against trying to make afast buck out of the UK confectioner.
Painted as a cost-crunching manufacturer ofplastic cheese, the US conglomeratewas seen as a threat not only to Cadbury's unique British heritage but also to its tax contributions.
Theworst fears of critics appeared to be realised just months after the dealwhen it emerged that the new owner (renamed Mondelez following a 2011 demerger)would reorganise Cadbury inways that ensured it paid little or no tax in Britain.
Kraft planned to shift Cadbury's management and purchasing activities offshore to its European headquarters in low-tax Switzerland, leaving the UK operation as little more than a shell, ladenwith £8bn of debt.
Newspapers claimed that £60m of annual tax paymentswould be lost and politicianswere incensed.The publicwill say that this is just tax avoidance and the publicwill be right, said Lindsay Hoyle, the deputy speaker of the House of Commons.
But the truth is that HM Revenue & Customs had little to lose from the deal. As a Financial Times review of Cadbury's tax affairs has discovered, the chocolate maker paid an average of £6.4m a year in current UK tax on its operations in the decade before the takeover.
For the story, go here.
Posted on
Pre-takeover Cadburys aggressive tax avoidance exposed
by Sally Gainsbury, Jonathan Ford and Vanessa Houlder (Financial Times)
Cadbury, the British confectionery makerwhich became a cause célèbre for tax justice campaigners after itwas acquired by US food group Kraft in 2010, engaged in aggressive tax avoidance schemes before the takeover thatwere designed to slash its UK tax bill by more than a third.
A Financial Times investigation into the tax affairs of the company established in 1824 by Quakers and famous for its philanthropic ethos has uncovered tax avoidance schemes former senior executives admitwerehighly aggressive.
The reality of Cadbury's tax affairs contrastswith the claim of campaigners and politicians that Kraft's takeoverwould cut its UK tax payments by £60m a year.
In fact, in the decade before the takeover, Cadbury paid an average of £6.4m a year in current tax on its ongoing UK operations, despite annual British profits of £100m and turnover of more than £1bn.
For the story, go here.
Cadbury, the British confectionery makerwhich became a cause célèbre for tax justice campaigners after itwas acquired by US food group Kraft in 2010, engaged in aggressive tax avoidance schemes before the takeover thatwere designed to slash its UK tax bill by more than a third.
A Financial Times investigation into the tax affairs of the company established in 1824 by Quakers and famous for its philanthropic ethos has uncovered tax avoidance schemes former senior executives admitwerehighly aggressive.
The reality of Cadbury's tax affairs contrastswith the claim of campaigners and politicians that Kraft's takeoverwould cut its UK tax payments by £60m a year.
In fact, in the decade before the takeover, Cadbury paid an average of £6.4m a year in current tax on its ongoing UK operations, despite annual British profits of £100m and turnover of more than £1bn.
For the story, go here.
Posted on
G-8 tax call wont be answered quickly on Hill
by Kelsey Snell and Lauren French (Politico)
Lawmakers from both parties are almost universally singing the praises of a new international plan to crack down on global tax evaders but thatwont translate into legislative action any time soon.
Principles unveiled Tuesday at the Group of Eight meeting in Northern Ireland called on tax authorities in theworld's leading economies to automatically share informationwith other countries to fight tax evasion. The agreement also said countries should change rules that allow companies to legally shift profits to low-tax jurisdictions to avoid paying taxes.
The deal essentially amounts to strong suggestions aboutways to make companies more transparent and governments more accountable for their tax policies. The Obama administration already has mechanisms in place to follow through butwill need buy-in from Congress on some proposals.
For the story, go here.
Lawmakers from both parties are almost universally singing the praises of a new international plan to crack down on global tax evaders but thatwont translate into legislative action any time soon.
Principles unveiled Tuesday at the Group of Eight meeting in Northern Ireland called on tax authorities in theworld's leading economies to automatically share informationwith other countries to fight tax evasion. The agreement also said countries should change rules that allow companies to legally shift profits to low-tax jurisdictions to avoid paying taxes.
The deal essentially amounts to strong suggestions aboutways to make companies more transparent and governments more accountable for their tax policies. The Obama administration already has mechanisms in place to follow through butwill need buy-in from Congress on some proposals.
For the story, go here.
Posted on
Tax Legislation: Lawmakers Aim to Lighten Taxes On Foreign Investors in Real Estate Trusts
by Marc Heller (Bloomberg)
Federal lawmakers are rekindling an effort to ease taxes on foreignerswho invest in real estate in the United States.
Two dozen senators, led by Sens. Robert Menendez (D-N.J.) and Mike Enzi (R-Wyo.), introduced legislation June 18 to allow more foreign investors in real estate investment trusts to avoid taxation, raising from 5 percent to 10 percent the share of a publicly-held company a foreign investor may ownwithout triggering a tax through the Foreign Investment in Real Property Tax Act (FIRPTA).
For the article, go here. (Subscription required)
Federal lawmakers are rekindling an effort to ease taxes on foreignerswho invest in real estate in the United States.
Two dozen senators, led by Sens. Robert Menendez (D-N.J.) and Mike Enzi (R-Wyo.), introduced legislation June 18 to allow more foreign investors in real estate investment trusts to avoid taxation, raising from 5 percent to 10 percent the share of a publicly-held company a foreign investor may ownwithout triggering a tax through the Foreign Investment in Real Property Tax Act (FIRPTA).
For the article, go here. (Subscription required)
Posted on
3M Could Succeed in Legal Challenge of Transfer Pricing Regulation, Practitioner Says
By Kristen A. Parillo (Tax Analysts; Tax Notes Today)
If the Tax Court follows recent Supreme Court case law on regulatory deference, technology company 3M Co. could succeed in its legal challenge of a 1994 Treasury regulation that permits the IRS to make a transfer pricing reallocationwithout regard to foreign legal restrictions, a practitioner said June 14.
For the story, go here. (subscription required.)
If the Tax Court follows recent Supreme Court case law on regulatory deference, technology company 3M Co. could succeed in its legal challenge of a 1994 Treasury regulation that permits the IRS to make a transfer pricing reallocationwithout regard to foreign legal restrictions, a practitioner said June 14.
For the story, go here. (subscription required.)
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G8 seeks rewrite of global tax rules
By George Parker and Vanessa Houlder in Lough Erne (Financial Times)
G8 leaders tried to plug the holes in their public financeswith a sweeping commitment to shake-up international corporate tax rules, including a new crackdown on tax evasion and the shadowy owners of shell companies.
The leaders of eight of theworld's biggest economies signed a 10-point Lough Erne Declaration that calls for tax authorities around theworld to automatically share information. It also urges countries to change the rules that let multinational companies shift profits across borders to avoid taxes and require them to reportwhat tax they paywhere.
For the story, go here.
G8 leaders tried to plug the holes in their public financeswith a sweeping commitment to shake-up international corporate tax rules, including a new crackdown on tax evasion and the shadowy owners of shell companies.
The leaders of eight of theworld's biggest economies signed a 10-point Lough Erne Declaration that calls for tax authorities around theworld to automatically share information. It also urges countries to change the rules that let multinational companies shift profits across borders to avoid taxes and require them to reportwhat tax they paywhere.
For the story, go here.
Posted on
Backing for tax and secrecy crackdown
By Vanessa Houlder (Financial Times)
UK Prime Minister David Cameron did not hold back on the superlatives on Tuesday afternoonwhen he declared a historic advance had been made at the Group of Eight summitwith thepotential to rewrite the rules on tax and fight thescourge of tax evasion.
For the story, go here.
UK Prime Minister David Cameron did not hold back on the superlatives on Tuesday afternoonwhen he declared a historic advance had been made at the Group of Eight summitwith thepotential to rewrite the rules on tax and fight thescourge of tax evasion.
For the story, go here.
Posted on
G-8 to Fight Tax Evasion -- Proposals Call for Changes in Laws to Stop Companies From Shifting Profits Across Borders
By Ainsley Thomson & John McKinnon (Wall Street Journal)
The Group of Eight leading industrialized nations agreed to proposals to tackle tax avoidance and evasion that call for new laws to stop businesses from shifting profits across borders and urge greater transparency about company ownership.
Tuesday's action reflected growing momentum among the largest economies for joint action to shore up their sometimes-leaky tax systems and shine more light in an often-murky area.
But the agreementswere short on specifics andwill require lengthy and difficult negotiations to implement, both for G-8 members and other countries aswell. Some activists criticized the G-8 for not going further, particularly on multinational businesses that often pay relatively low taxes thanks to porous rules.
For the story, go here.
The Group of Eight leading industrialized nations agreed to proposals to tackle tax avoidance and evasion that call for new laws to stop businesses from shifting profits across borders and urge greater transparency about company ownership.
Tuesday's action reflected growing momentum among the largest economies for joint action to shore up their sometimes-leaky tax systems and shine more light in an often-murky area.
But the agreementswere short on specifics andwill require lengthy and difficult negotiations to implement, both for G-8 members and other countries aswell. Some activists criticized the G-8 for not going further, particularly on multinational businesses that often pay relatively low taxes thanks to porous rules.
For the story, go here.
Posted on
Osborne raises hopes of G8 tax deal
By Jim Pickard, Chief Political Correspondent (Financial Times)
George Osborne has raised the hopes of an imminent G8 deal on tax as he declared that there had been rapid progress in talks over a newregister thatwould show the ownership structures of companies.
The British government has said it isleading theway on transparency by creating a central register of company ownership, although it is still unclearwhether thiswill be opened up to the public or just to the tax authorities.
The UK is trying to persuade all the other G8 countries to sign up to the action plan onbeneficial ownership, an attempt to shine a light into the often opaque ownership structures in the businessworld.
For the story, go here.
George Osborne has raised the hopes of an imminent G8 deal on tax as he declared that there had been rapid progress in talks over a newregister thatwould show the ownership structures of companies.
The British government has said it isleading theway on transparency by creating a central register of company ownership, although it is still unclearwhether thiswill be opened up to the public or just to the tax authorities.
The UK is trying to persuade all the other G8 countries to sign up to the action plan onbeneficial ownership, an attempt to shine a light into the often opaque ownership structures in the businessworld.
For the story, go here.
Posted on
G8 leaders seek common ground on tax
By Lindsaywhipp and Jim Pickard (Financial Times)
Prime Minister David Cameronwill lead a key discussion on tax evasion and avoidance on Tuesday, as Group of Eight leaders tackle an important but complex issue onwhich progress can be slow moving.
While international leaders agree on the need to tackle evasion and increase transparency, it is more difficult for them to find a single voice over how to change tax rules to counter avoidance. This is partly due to the complicated nature of tax legislation across the globe, but also because G8 countries are essentially competing for tax dollars and inward investment in a post financial-crisisworld of high government debt and slow growth.
The aim is to form action plans to increase transparency and make headway on automatic information exchange, ahead of the Group of 20 meeting in September atwhich members are expected to agree concrete steps to tackle profit shifting by multinationals.
For the story, go here.
Prime Minister David Cameronwill lead a key discussion on tax evasion and avoidance on Tuesday, as Group of Eight leaders tackle an important but complex issue onwhich progress can be slow moving.
While international leaders agree on the need to tackle evasion and increase transparency, it is more difficult for them to find a single voice over how to change tax rules to counter avoidance. This is partly due to the complicated nature of tax legislation across the globe, but also because G8 countries are essentially competing for tax dollars and inward investment in a post financial-crisisworld of high government debt and slow growth.
The aim is to form action plans to increase transparency and make headway on automatic information exchange, ahead of the Group of 20 meeting in September atwhich members are expected to agree concrete steps to tackle profit shifting by multinationals.
For the story, go here.
Posted on
Havens crackdown: Momentum builds for tax transparency
By Vanessa Houlder (Financial Times)
The 2013 summit has the potential to go down in history asthe turning point in the battle against tax evasion and avoidance, according to David Cameron, UK prime minister.
He has called on governments tobreak down thewalls of corporate secrecy by introducing central registers for corporate ownership. Talkswill also focus on the cross-border sharing of tax information andwhether companies should be encouraged to reportwhat they pay in the countries inwhich they operate on a voluntary basis.
For the story, go here.
The 2013 summit has the potential to go down in history asthe turning point in the battle against tax evasion and avoidance, according to David Cameron, UK prime minister.
He has called on governments tobreak down thewalls of corporate secrecy by introducing central registers for corporate ownership. Talkswill also focus on the cross-border sharing of tax information andwhether companies should be encouraged to reportwhat they pay in the countries inwhich they operate on a voluntary basis.
For the story, go here.
Posted on
Foray into global tax fraught with challenges
By James Politi inwashington (Financial Times)
US business groups have been opposed to even the smallest foray into the kind of country-by-country tax reporting debated by Group of Eight leaders, highlighting the challenges in implementing such provisions even·if¬∑agreement¬∑is reached in Northern Ireland.
A key plank of the G8 agenda to boost tax transparency by multinationals has been to force them to at least disclose how much tax they pay in each country.
The EU and the US have taken steps in that directionwith regard to oil, gas and mining companies, but applying these requirements to all sectors is expected to be resisted across the corporateworld.
In the US, the provision requiring country-by-country reporting in the energy sector, buried inside the Dodd-Frankwall Street reform bill enacted three years ago, has been the subject of a legal challenge and lobbying to kill it before it takes effect next year.
For the story, go here.
US business groups have been opposed to even the smallest foray into the kind of country-by-country tax reporting debated by Group of Eight leaders, highlighting the challenges in implementing such provisions even·if¬∑agreement¬∑is reached in Northern Ireland.
A key plank of the G8 agenda to boost tax transparency by multinationals has been to force them to at least disclose how much tax they pay in each country.
The EU and the US have taken steps in that directionwith regard to oil, gas and mining companies, but applying these requirements to all sectors is expected to be resisted across the corporateworld.
In the US, the provision requiring country-by-country reporting in the energy sector, buried inside the Dodd-Frankwall Street reform bill enacted three years ago, has been the subject of a legal challenge and lobbying to kill it before it takes effect next year.
For the story, go here.
Posted on
UK under pressure from Berlin over tax competition
By Vanessa Houlder and Quentin Peel (Financial Times)
Britain is coming under pressure from Berlin to rein back on tax competition, amid fears that a break on the levy aimed at high tech companieswill undermine German revenues.
Concerns about Britain's efforts to attract investment by cutting taxes have risen as German companies moved to take advantage of an incentive for patent income.
For the story, go here.
Britain is coming under pressure from Berlin to rein back on tax competition, amid fears that a break on the levy aimed at high tech companieswill undermine German revenues.
Concerns about Britain's efforts to attract investment by cutting taxes have risen as German companies moved to take advantage of an incentive for patent income.
For the story, go here.
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UK to set up central tax register
By George Parker, Jim Pickard and Vanessa Houlder (Financial Times)
Britain is to lead by example in its push for greater tax transparency by setting up a new central register to try to ensure that the true owners of shell companies often located in tax havens pay their taxes.
David Cameron hopes to persuade other big economies to set up similar registerswhen he chairs the G8 summit in Northern Ireland nextweek, a move designed to recover the billions of pounds in lost revenue suffered by exchequers around theworld.
For the story, go here.
Britain is to lead by example in its push for greater tax transparency by setting up a new central register to try to ensure that the true owners of shell companies often located in tax havens pay their taxes.
David Cameron hopes to persuade other big economies to set up similar registerswhen he chairs the G8 summit in Northern Ireland nextweek, a move designed to recover the billions of pounds in lost revenue suffered by exchequers around theworld.
For the story, go here.
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Cameron under pressure to push for G8 tax transparency deal
By Vanessa Houlder and George Parker in London (Financial Times)
David Cameron is under pressure to build on a tax transparency dealwith British offshore territories by pushing for aglobal agreement at the summit of the Group of Eight leading economies .
Global poverty charitieswelcomed the UK prime ministers success in bringing British territories such as Bermuda into the framework on Saturday but said he needed to go further in promoting real transparency to crack down on tax evasion and aggressive avoidance.
Mr Cameron said the UKwas leading theway on transparency by creating a central register of company ownership. But he faced criticism from campaigners for only offering to consult onwhether it be opened up to the public rather than just tax authorities.
For the story, go here.
David Cameron is under pressure to build on a tax transparency dealwith British offshore territories by pushing for aglobal agreement at the summit of the Group of Eight leading economies .
Global poverty charitieswelcomed the UK prime ministers success in bringing British territories such as Bermuda into the framework on Saturday but said he needed to go further in promoting real transparency to crack down on tax evasion and aggressive avoidance.
Mr Cameron said the UKwas leading theway on transparency by creating a central register of company ownership. But he faced criticism from campaigners for only offering to consult onwhether it be opened up to the public rather than just tax authorities.
For the story, go here.
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Camp Signals Support for 15% Foreign Patent Income Rate: Taxes
by Aaron E. Lorenzo (Bloomberg)
For companieswith a lot of foreign income from intangible products like patents, Dave Camp has a carrot-and-stick approach to overhauling the tax code.
Camp, the top Republican taxwriter in the U.S. House of Representatives, says putting a rate of 15 percent on all foreign income from intellectual property rights and intangibleswould limit revenue erosionwhen Congress pursues broad tax reform, Bloomberg BNA reported.
For the story, go here.
For companieswith a lot of foreign income from intangible products like patents, Dave Camp has a carrot-and-stick approach to overhauling the tax code.
Camp, the top Republican taxwriter in the U.S. House of Representatives, says putting a rate of 15 percent on all foreign income from intellectual property rights and intangibleswould limit revenue erosionwhen Congress pursues broad tax reform, Bloomberg BNA reported.
For the story, go here.
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Editorial: The world needs global tax reform -- G8 leaders must continue their work beyond the summit
As leaders of the Group of Eight leading economies gather in Northern Ireland, David Cameron'swelcome initiative to reform global corporate tax rules may still fall short of definitive success. All the more reason for governments to push on after the summit, together and at home.
For the editorial, go here.
For the editorial, go here.
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Why we need to simplify our corporate tax system
by Eric Schmidt (Financial Times)
The G8 is the forum to decide on the complex issue of company fiscal reform, says Eric Schmidt
As the leaders of theworlds largest economies descend on beautiful, blustery Lough Erne, their briefingswill doubtless be packedwith different ideas for international tax reform. Todays rules are fiendishly complicated and everyonewould benefit from a simpler, more transparent system. That iswhywe have been encouraging a broader debate at the level of the Group of Eight leading economies and the Organisation for Economic Co-operation and Development.
For the commentary, go here.
The G8 is the forum to decide on the complex issue of company fiscal reform, says Eric Schmidt
As the leaders of theworlds largest economies descend on beautiful, blustery Lough Erne, their briefingswill doubtless be packedwith different ideas for international tax reform. Todays rules are fiendishly complicated and everyonewould benefit from a simpler, more transparent system. That iswhywe have been encouraging a broader debate at the level of the Group of Eight leading economies and the Organisation for Economic Co-operation and Development.
For the commentary, go here.
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The G8 agenda: The transparency summit -- Britain's leader envisages a world of tax compliance and clear corporate ownership
At first blush, David Cameron seems an unlikely foe of tax dodgers and their accomplices. Conservatives are traditionally friendly to thewealthy and to big business,who gain most from fancy financial footwork. The City of London enjoys symbiosiswith a cluster of offshore dependenciesincluding Jersey and the British Virgin Islands (BVI)which have a reputation for, at best, inviting tax avoidance and, atworst, aiding financial crime.
But as chair of the summit of the G8 (the biggest industrialised countries) being held in Northern Ireland nextweek, the prime ministerwill push for global reform of theworld economys most shadowy corners. Hewants to improve tax compliance through the cross-border exchange of information, to improve those data by making companies, trusts and the like show their true owners, and to change outdated ruleswhich multinationals exploit to cut their tax bills. His assault is both on the offshore tax havens and on the often dodgier, if lesswell-known, practices in onshore jurisdictions such as Delawareor London.
For the story, go here.
But as chair of the summit of the G8 (the biggest industrialised countries) being held in Northern Ireland nextweek, the prime ministerwill push for global reform of theworld economys most shadowy corners. Hewants to improve tax compliance through the cross-border exchange of information, to improve those data by making companies, trusts and the like show their true owners, and to change outdated ruleswhich multinationals exploit to cut their tax bills. His assault is both on the offshore tax havens and on the often dodgier, if lesswell-known, practices in onshore jurisdictions such as Delawareor London.
For the story, go here.
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WNTS Insight: House Ways and Means Committee tax reform hearing focuses on tax havens, base erosion, and profit shifting
The Houseways and Means Committee today held a hearing on tax reform issues related to US international tax rules and tax havens, base erosion, and profit shifting. The hearing also discussed approaches for reforming US domestic tax rules through rate reduction and base broadening. In addition, the hearing examined OECD initiatives that seek to address concerns over transfer pricing, the tax treatment of intangible property, and related issues as part of an action plan addressing base erosion and profit shifting (BEPS).
For thewNTS Insight, go here.
For thewNTS Insight, go here.
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U.K. Lawmakers Slam Google Over Contrived Tax Strategy
U.K. lawmakers attacked Google Inc. (GOOG) for defending ahighly contrived strategy of booking advertising sales through Ireland to reduce its tax liability in Britain.
Parliament's Public Accounts Committee said in a report published in London today thatpublic confidence in the companywill only be restoredwhen it establishes a corporate structure that ensures Google pays taxwhere it generates profit.
For the article, go here.
Parliament's Public Accounts Committee said in a report published in London today thatpublic confidence in the companywill only be restoredwhen it establishes a corporate structure that ensures Google pays taxwhere it generates profit.
For the article, go here.
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Commentary: "How America Lost Its Way"
Not everyone is an entrepreneur. Still, everyone should try -- if only once -- to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the deskwhere the buck stops, in a dreary office you've just rented,working day and nightwith a handful of employees just to break even.
As an academic, I'm just an amateur capitalist. Still, over the past 15 years I've started small ventures in both the U.S. and the U.K. In the process I've learned something surprising: It's much easier to do in the U.K. There seemed to be much more regulation in the U.S., not least the headache of sorting out health insurance for my few employees. And therewere certainly more billable hours from lawyers.
For the article, go here.
As an academic, I'm just an amateur capitalist. Still, over the past 15 years I've started small ventures in both the U.S. and the U.K. In the process I've learned something surprising: It's much easier to do in the U.K. There seemed to be much more regulation in the U.S., not least the headache of sorting out health insurance for my few employees. And therewere certainly more billable hours from lawyers.
For the article, go here.
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ACT Statement on Todays Ways and Means Hearing on Tax Reform
The Alliance for Competitive Taxation (ACT), a coalition of 42 leading American businesses that employ millions of Americanworkers, issued the following statement regarding today's Houseways and Means Committee hearing on tax reform:
“ACTwelcomes the hearing today on an important issue to advancing tax reform. ACT supports comprehensive tax reform that lowers the corporate tax rate to 25%, gets rid of corporate tax breaks and preferences and establishes a modern hybrid international tax system. ..."
For the statement, go here.
“ACTwelcomes the hearing today on an important issue to advancing tax reform. ACT supports comprehensive tax reform that lowers the corporate tax rate to 25%, gets rid of corporate tax breaks and preferences and establishes a modern hybrid international tax system. ..."
For the statement, go here.
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Schwartz: Bipartisan Tax Reform Urgently Needed to Keep Jobs in U.S.
U.S. Representative Allyson Y. Schwartz (PA-13) issued the following statement at today's Houseways and Means Committee hearing examining the various tax planning strategies used by multinational corporations to shift income out of the United States and into low-tax jurisdictions.
“Today's hearing highlights the necessity of reforming our tax code. Recent reports have shown that our current tax code puts American businesses, our economy, andworkers at a disadvantage in the global marketplace and robs the federal government of the revenue needed to meet our obligations. Our current tax code makes it easy to game the system and rewards shipping jobs overseas,while giving companies no incentives to create middle-class jobs here at home, said Congresswoman Schwartz.
For the statement, go here.
“Today's hearing highlights the necessity of reforming our tax code. Recent reports have shown that our current tax code puts American businesses, our economy, andworkers at a disadvantage in the global marketplace and robs the federal government of the revenue needed to meet our obligations. Our current tax code makes it easy to game the system and rewards shipping jobs overseas,while giving companies no incentives to create middle-class jobs here at home, said Congresswoman Schwartz.
For the statement, go here.
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Ways and Means Considers Base Erosion and Profit Shifting
Questioning a panel of experts on the merits of a territorial regime, offshore cash stockpiles, and the promotion of American manufacturing, the Houseways and Means Committee considered how best to combat base erosion and profit shifting (BEPS) at a hearing on June 13. Also up for deliberationwas an anti-base-erosion proposal that committee Chair Dave Camp, R-Mich., included in his 2011 discussion drafton corporate taxation.
For the story, go here. (Subscription required.)
For the story, go here. (Subscription required.)
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Transfer Pricing No Call for Formulary Apportionment In OECD Base Erosion Action Plan, Official Says
The Organization for Economic Cooperation and Developmentwill not recommend a shift from the arm's length principle to formulary apportionment in its July action plan on its project addressing base erosion and profit shifting (BEPS), OECD's top tax official told BNA June 13.
For the story, go here. (Subscription required.)
For the story, go here. (Subscription required.)
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Tax Reform: Camp Signals Support for Taxing Foreign Income From Intangibles at 15 Percent Rate
All foreign income attributable to intangible products, such as intellectual property rights, could be taxed at a 15 percent rate as part of a plan to reform the tax code and limit erosion of the U.S. tax base, Houseways and Means Committee Chairman Dave Camp (R-Mich.) said in a plan highlighted June 13.
Companies could get below a 15 percent effective rate by subtracting any credits for foreign taxes paid on the same income, Camp said during a tax reform hearing on tax havens, base erosion, and profit-shifting.
For the story, go here. (Subscription required.)
Companies could get below a 15 percent effective rate by subtracting any credits for foreign taxes paid on the same income, Camp said during a tax reform hearing on tax havens, base erosion, and profit-shifting.
For the story, go here. (Subscription required.)
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Witness Statements at 6/13 W&M Hearing on "Tax Reform: Tax Havens, Base Erosion and Profit-Shifting"
The Houseways and Means Committee has released thewritten testimony of thewitnesses at its June 13 hearing on Tax Reform: Tax Havens, Base Erosion and Profit-Shifting. Thewitnesses are:
- Pascal Saint-Amans, Director, Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development (OECD);
- Edward Kleinbard, Professor of Law, University of Southern California Gould School of Law; and
- Paul Oosterhuis, Partner, Skadden Arps Slate Meager & Flom LLP.
For the testimony, go here.
- Pascal Saint-Amans, Director, Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development (OECD);
- Edward Kleinbard, Professor of Law, University of Southern California Gould School of Law; and
- Paul Oosterhuis, Partner, Skadden Arps Slate Meager & Flom LLP.
For the testimony, go here.
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Chairman Camp Opening Statement at 6/13 W&M Hearing on "Tax Reform: Tax Havens, Base Erosion and Profit-Shifting
On October 26, 2011, as part of its overall approach to comprehensive tax reform that lowers rates and broadens the base, this Committee released a discussion draft aimed at modernizing our outdated international tax rules. The draft included a structure thatwould allow the U.S. to move from aworldwide taxation system to a participation exemption system similar to that used by almost all of our major trading partners. In the interest of transparency,we made a specific requestwe actively sought feedback from stakeholders taxpayers, practitioners, economists, and members of the general public on how to improve the draft proposal.
Since then,we have heard from awide range of practitioners andworldwide American companies. Nearly all have offered a universal observation having the highest corporate rate in the developedworld alongwith an outdated international tax system is a barrier to success that leaves our country falling further behind our foreign competitors. Academics and economists agreed, and also cautioned, that any solution to these challenges must protect against erosion of the U.S. tax base through the shifting of profits to low-tax jurisdictions.
For Chairman Camp's opening statement, go here.
Since then,we have heard from awide range of practitioners andworldwide American companies. Nearly all have offered a universal observation having the highest corporate rate in the developedworld alongwith an outdated international tax system is a barrier to success that leaves our country falling further behind our foreign competitors. Academics and economists agreed, and also cautioned, that any solution to these challenges must protect against erosion of the U.S. tax base through the shifting of profits to low-tax jurisdictions.
For Chairman Camp's opening statement, go here.
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Corporate Pirates of the Caribbean -- Pro-Austerity CEOs [Fix the Debt] Seek to Widen Tax Haven Loophole
CEOswith the dubious lobby group "Fix the Debt" are pushing for cuts to Social Security, Medicare, and the social safety net, painting themselves as the good guys in the budget debate. But as they ask for everyday Americans to accept cuts, these CEOs are brazenly seeking towiden tax haven loopholes thatwould benefit their corporations such as a "territorial" tax system -- and earn them billions.
A new report by the Institute for Policy Studies shows that Fix the Debt member corporations stand to gain as much as $173 billion inwindfalls if Congress adopts their proposal for a territorial tax system.
For the report, go here.
A new report by the Institute for Policy Studies shows that Fix the Debt member corporations stand to gain as much as $173 billion inwindfalls if Congress adopts their proposal for a territorial tax system.
For the report, go here.
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Commentary: Time for Business Tax Reform
The U.S. last reformed its business tax code in 1986,when Forbes reported that 218 of theworld's largest 500 companieswere based in the U.S. Since then, theworld economy has become larger and more competitive, and production and employment have become more globalized. Today, the U.S. is home to only 137 of theworld's largest 500 companies by sales and is competingwith many countries for the production, research and jobs of global businesses. The current corporate tax code is a major impediment in this competition; it makes the U.S. less attractive as a place to do business and disadvantages American multinational companies.
After the 1986 tax overhaul, the U.S. had one of the lowest corporate tax rates among major economies in theworld. Today, it has the highest. The U.S. is also one of the few industrialized countries that still have aworldwide system that taxes the foreign earnings of its multinational companies. In contrast, more than 90 percent of theworld's largest companies from advanced economies are based in countrieswithterritorial systems that exempt most of the foreign earnings from domestic taxation. U.S. multinational companies, on the other hand, currently have about $2 trillion in foreign earnings that they cannot invest in the U.S.without incurring a substantial U.S. tax penalty.
For the editorial, go here.
After the 1986 tax overhaul, the U.S. had one of the lowest corporate tax rates among major economies in theworld. Today, it has the highest. The U.S. is also one of the few industrialized countries that still have aworldwide system that taxes the foreign earnings of its multinational companies. In contrast, more than 90 percent of theworld's largest companies from advanced economies are based in countrieswithterritorial systems that exempt most of the foreign earnings from domestic taxation. U.S. multinational companies, on the other hand, currently have about $2 trillion in foreign earnings that they cannot invest in the U.S.without incurring a substantial U.S. tax penalty.
For the editorial, go here.
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Taxman presence at multinationals adds to avoidance fears
The presence of hundreds of federal tax agents inside some of the US's biggest multinationals has added to the growing debate about tax avoidance ahead of a Group of Eight summit expected to discuss the issue this month.
The expected focus of this month's G8 has been on the elaborate, if legal, schemes set up by multinationals to minimise their tax bills, and how to overhaul laws to prevent the erosion of the corporate tax base around theworld.
But in the US,where hundreds of federal tax agents are often stationed inside the largest multinationals, there are increased questions aboutwhether these embedded Internal Revenue Service agents are too tough, tooweak or even too cosy in dealingwith the companies they cover.
For the story, go here.
The expected focus of this month's G8 has been on the elaborate, if legal, schemes set up by multinationals to minimise their tax bills, and how to overhaul laws to prevent the erosion of the corporate tax base around theworld.
But in the US,where hundreds of federal tax agents are often stationed inside the largest multinationals, there are increased questions aboutwhether these embedded Internal Revenue Service agents are too tough, tooweak or even too cosy in dealingwith the companies they cover.
For the story, go here.
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Occupy Wall Street Stylists Pursue U.K. Tax Dodgers
UK Uncut has no offices and no formal leader, and key members often plot strategy over midnight pints of ale in London pubs.
Yet,with more than 60,000 Twitter followers and a sprawling network of college-educated volunteers, the Occupywall Street-style group has helped galvanize public opposition to corporate tax avoidance. It has demonstrated inside Starbucks Corp. (SBUX) coffee shops, sued Britain's tax collection agency over a dealwith Goldman Sachs Group Inc. and shut down London'swestminster Bridge. It plans to target this month's summit of the Group of Eight, theworld's eightwealthiest countries.
For the story, go here.
Yet,with more than 60,000 Twitter followers and a sprawling network of college-educated volunteers, the Occupywall Street-style group has helped galvanize public opposition to corporate tax avoidance. It has demonstrated inside Starbucks Corp. (SBUX) coffee shops, sued Britain's tax collection agency over a dealwith Goldman Sachs Group Inc. and shut down London'swestminster Bridge. It plans to target this month's summit of the Group of Eight, theworld's eightwealthiest countries.
For the story, go here.
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DEALBOOK: Despite Tax Rules, Companies Stick With U.S.
The tactics that multinational companies like Apple, Microsoft and Hewlett-Packard use to avoid paying corporate income taxes might make onewonderwhy they incorporate in the United States in the first place.why not Ireland?
Advocates of a territorial-based tax system often point out that taxing United States companies on theirworldwide income creates an incentive for new companies to incorporate abroad instead. Many countries tax income earned onlywithin their borders. The United States, by contrast, purports to tax companies on theirworldwide income,with credits for any foreign taxes paid.
For the story, go here.
Advocates of a territorial-based tax system often point out that taxing United States companies on theirworldwide income creates an incentive for new companies to incorporate abroad instead. Many countries tax income earned onlywithin their borders. The United States, by contrast, purports to tax companies on theirworldwide income,with credits for any foreign taxes paid.
For the story, go here.
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Economic Analysis: "Intangible Profits: Oh, the Places You'll Go!"
If you readwhat law professors havewritten aboutwhere intangible income should be sourced, you'll soon realize that there are no easy answers to that critical question.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
Posted on
Taxes help shape multinational companies
We instinctively assign national identities to large global corporations. Toyota is Japanese; IBM is American; Siemens is German; Samsung is Korean.we assume these big firms reflect their national origins and act as informal instruments of government policy. Up to a point, this is probably true. Companies' personalities do embody the culture and values of their place of birth. No doubt many executives feel patriotic toward their homeland. But as these multinational firms spread their sales, production and marketing activities around theworld, their interests and loyalties seem more murky, conflicted and stateless.
This may explain, I think, the muddled reaction to the recent appearance of Apple chief executive Timothy Cook before the Senate Permanent Subcommittee on Investigations. You may recall that the subjectwas Apple's ability to shelter a huge slice of its global profits from taxation. A subcommittee staff study found that from 2009 to 2012 Apple had paid almost no taxes on about $74 billion in profits earned outside the United States. These global profitswere diverted to Ireland,which levied almost no tax. The legal mechanics of how this occurredwere less impressive than the sheer magnitude of avoidance.
For the op-ed, go here.
This may explain, I think, the muddled reaction to the recent appearance of Apple chief executive Timothy Cook before the Senate Permanent Subcommittee on Investigations. You may recall that the subjectwas Apple's ability to shelter a huge slice of its global profits from taxation. A subcommittee staff study found that from 2009 to 2012 Apple had paid almost no taxes on about $74 billion in profits earned outside the United States. These global profitswere diverted to Ireland,which levied almost no tax. The legal mechanics of how this occurredwere less impressive than the sheer magnitude of avoidance.
For the op-ed, go here.
Posted on
Intangibles Next Release of OECD Intangibles: Draft To Address Location Savings, Official Says
The next release of the Organization for Economic Cooperation and Development's discussion draft on intangibleswill cover comparability factors including corporate synergies, local market conditions, and location savings, an OECD official said June 6.
For the story, go here. (Subscription required.)
For the story, go here. (Subscription required.)
Posted on
Ways & Means Committee Sets 6/13 Hearing on "Tax Reform: Tax Havens, Base Erosion and Profit-Shifting"
Congressman Dave Camp (R-MI), Chairman of the Committee onways and Means, today announced that the Committeewill hold a hearing on U.S. and foreign multinational corporations use of tax havens (low- and no-tax jurisdictions) to avoid tax and shift profits outside the United States and erode the U.S. tax base as part of the Committee's continuedwork on comprehensive tax reform. The hearingwill take place on Thursday, June 13, 2013, in Room 1100 of the Longworth House Office Building, beginning at 10:00 A.M.
For the release, go here.
For the release, go here.
Posted on
How Supreme Court's PPL ruling will reduce transaction costs for US multinationals
US multinationals should see their transaction costs reducedwhen investing in foreign jurisdictions following the Supreme Court's judgment in favour of energy company PPL.
For the article, go here.
For the article, go here.
Posted on
German Min Fin could introduce patent box to compete with others in Europe
German officials are concerned about the country's potential loss of competitive advantage because of new intellectual property tax incentives being offered by other European countries such as the UK.
For the story, go here.
For the story, go here.
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