DOCSLIB.ORG

BASIC INTERNATIONAL TAXATION Second Edition Volume I: Principles

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
BASIC INTERNATIONAL TAXATION Second Edition Volume I: Principles Second Edition Volume I: Principles Second Edition Volume Roy Rohatgi - TAXATION BASIC INTERNATIONAL Roy Rohatgi BASIC INTERNATIONAL TAXATION Second Edition Volume I: Principles Second Edition Volume I: Principles Second Edition Volume Roy Rohatgi - TAXATION BASIC INTERNATIONAL Roy Rohatgi BASIC INTERNATIONAL TAXATION Second Edition Volume I: Principles August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Basic International Taxation i August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex ii August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Basic International Taxation (Second Edition) By Roy Rohatgi Volume One Principles of International Taxation iii August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Published by: Richmond Law & Tax Ltd. 12-14 Hill Rise Richmond TW10 6UA United Kingdom Tel: +44 (0) 20 8614 7650 Fax: +44 (0) 20 8614 7651 [email protected] www.richmondlawtax.com Hardbound ISBN 1 904 501 346, Softbound ISBN 1 904 501 575 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © Roy Rohatgi 2005 This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Cover design by Bill Anderson Associates Typeset by SR Nova Private Limited, Bangalore, India Printed and bound by Antony Rowe Ltd iv August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex TABLE OF CONTENTS – VOLUME ONE Prefaces xvi About the Author xx VOLUME ONE – PRINCIPLES OF INTERNATIONAL TAXATION CHAPTER 1 AN OVERVIEW OF INTERNATIONAL TAXATION 1 1. What is International Taxation? 1 2. International Tax Conflicts and Double Taxation 2 3. Double Tax Treaties 3 4. Domestic Tax Systems 4 5. International Offshore Financial Centres 4 6. Anti-avoidance Measures 5 7. International Tax Planning 6 8. Structure of the Book 7 9. Suggested Further Reading 8 9.1. Books 8 9.2. OECD Publications 8 9.3. Journals and Periodicals 9 9.4. Websites 10 CHAPTER 2 PRINCIPLES OF INTERNATIONAL TAX LAW 13 1. International Tax Law 13 1.1. Definition 13 1.2. Double Taxation 14 1.3. Connecting Factor Conflicts 16 1.4. Dual Role of Treaties 17 1.5. Country Examples 18 1.6. Is International Tax Law Enforceable 21 1.7. International Tax Principles and Tax Treaties – Comments 22 2. Application of Tax Treaties 27 2.1. Vienna Convention on the Law of Treaties 27 2.2. How International Treaties Come into Force 31 v August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Table of Contents 2.3. Limitations of Double Tax Treaties 32 2.4. Can Domestic Law Override a Tax Treaty 34 2.5. Remedies against Treaty Overrides 37 3. Interpretation of Tax Treaties 38 3.1. General 38 3.2. Interpretation under the VCLT 39 3.3. Model Conventions and Commentaries 43 3.4. Other Extra-textual Material 47 3.5. Interpretative Rule under OECD MC Article 3(2) 48 3.6. Conflicts of Qualification 53 4. Some Legal Decisions on Treaty Interpretations 56 4.1. Legal Interpretations 56 4.2. Reference to the VCLT 57 4.3. Reference to the OECD MC and Commentaries 58 4.4. Other Judicial Decisions 59 4.5. Country Examples 60 5. Model Tax Conventions 64 5.1. Historical Background 64 5.2. How do Model Tax Treaties Work 68 5.3. Relief against Juridical Double Taxation 70 5.4. Benefits of the Model Tax Treaties – Some Examples 72 5.5. OECD and UN Model Conventions – Comments 73 6. Multilateral Tax Agreements 75 6.1. General 75 6.2. Andean Pact 75 6.3. CARICOM Multilateral Tax Agreement 76 6.4. Nordic Convention 76 6.5. Council for Mutual Economic Assistance Agreement (“CMEA”) 77 6.6. Others 77 7. European Union 77 7.1. General 77 7.2. Business Code of Conduct 80 7.3. European Union Tax Directives 80 7.4. Other Multilateral Agreements 83 7.5. European Human Rights Convention 83 7.6. Comments 84 8. Harmful Tax Competition 85 8.1. Background 85 8.2. Historical Development 85 8.3. Guidance (Application Note) Report 90 8.4. Comments 93 9. Suggested Further Reading 94 vi August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Table of Contents CHAPTER 3 MODEL TAX CONVENTIONS ON DOUBLE TAX AVOIDANCE 97 1. OECD Model Convention on Income and Capital (OECD MC) 97 1.1. General 97 1.2. Other Contents of the Model Convention 98 1.3. Distributive Rules under the Model Convention 100 1.4. Attribution Rules under the Model Convention 103 2. UN Model Convention (UN MC) 103 2.1. General 103 2.2. Significant Differences between the OECD and the UN MC 105 3. US Model Convention (US MC) 108 3.1. General 108 3.2. Significant Differences between OECD and US MC 109 4. Articles in the Model Conventions 112 5. Bilateral Tax Treaties 193 6. Suggested Further Reading 194 CHAPTER 4 IMPACT OF DOMESTIC TAX SYSTEMS 195 1. Introduction 195 1.1. General 195 1.2. Connecting Factors 196 1.3. Resident v Nonresident 196 1.4. Full v Limited Taxation 197 2. Tax Residence or Fiscal Domicile 199 2.1. General 199 2.2. Residence of Individuals 199 2.3. Residence of Companies 209 2.4. Residence of Other Entities 220 2.5. Domicile under Common Law 221 3. Source of Income or Gain 222 3.1. General 222 3.2. Basic Source Rules 223 3.3. Taxing Source Rules 225 3.4. Conflicts in Source Rules 226 4. Basis of Tax Computation 227 4.1. General 227 4.2. Tax Rate 228 4.3. Tax Base 233 4.4. Accounting Policies 238 4.5. Tax Allowances and Disallowances 243 4.6. Tax Incentives 246 4.7. Assessment and Withholding Taxes 248 vii August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Table of Contents 5. Treatment of Tax Losses 250 5.1. General 250 5.2. Revenue or Trading Losses 252 5.3. Capital Losses 254 5.4. Foreign Branch Losses 255 5.5. Group Taxation 256 6. Advance Tax Rulings 257 6.1. General 257 6.2. Country Examples 259 7. Passive Income 264 7.1. Dividend Income 264 7.2. Interest Income and Expense 268 7.3. Royalty Income and Payments 272 7.4. Capital Gains 275 8. Foreign Tax Relief 278 8.1. General 278 8.2. Expense Deduction 279 8.3. Exemption Method 279 8.4. Foreign Tax Credit 280 8.5. Country Examples 287 9. Suggested Further Reading 295 APPENDIX - GLOSSARY OF INTERNATIONAL TAX TERMS 297 EXHIBITS – MODEL TAX TREATIES 341 1. OECD Model Tax Convention on Income and on Capital (January 28, 2003) 341 2. United Nations Model Double Taxation Convention between Developed and Developing Countries January 11, 2001 357 3. United States Model Income Tax Convention of September 20, 1996 374 4. League of Nations Model Bilateral Convention (with Commentaries) for the Prevention of Double Taxation in the Special Matter of Direct Taxes Presented in Geneva, October 1928 (1928 Draft) 394 5. League of Nations Revised Text of the Convention for the Allocation of Business Income between States for the Purposes of Taxation, Geneva, June 1935 (1935 Draft) 411 6. League of Nations Model Bilateral Convention for the Prevention of the Double Taxation of Income presented in Mexico City, July 1943 (Mexico Draft) 416 7. League of Nations Model Bilateral Convention for the Prevention of the Double Taxation of Income and Property presented in London, March 1946 (London Draft) 424 viii August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Table of Contents 8. Commentaries on Mexico Draft (Exhibit 6) and London Draft (Exhibit 7) of the League of Nations 433 9. Model Convention for the Avoidance of Double Taxation between Member Countries and Other Countries outside the Andean Subregion (Andean Model) 451 Index to Volume One 457 ix August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex x August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex TABLE OF CONTENTS – VOLUME TWO Note: The contents ofVolumeTwo below are provisional and may be subject to changes when published. They have been included in Volume One (without page references) to provide the readers with an overview of the contents of the entire book. VOLUME TWO – PRACTICE OF INTERNATIONAL TAXATION CHAPTER 5 BASIC PRINCIPLES OF INTERNATIONAL TAX PLANNING 1. International Tax Planning 1.1. What is International Tax Planning 1.2. Need for International Tax Planning 1.3. Opportunities for International Tax Planning 1.4. International Tax Planning Techniques 1.5. International Tax Planning – a Methodology 1.6. Role of International Tax Planner 2. International Tax Structures 2.1. General 2.2. Examples of Tax-beneficial Structures 2.3. Forms of Business Entity 2.4. Financing of Overseas Entities 3. Tax Planning for Cross-border Transactions – Some Examples 3.1. Conversion of a Foreign Branch to a Foreign Subsidiary 3.2. Mergers and Acquisitions 3.3. Repatriation of Profits 3.4. Liquidation of Companies 3.5. Cross-border Leasing 3.6. Foreign Direct Investment 4. International Tax Planning for Expatriate Individuals 4.1. General 4.2. Treaty Provisions 4.3. Tax Planning Considerations 4.4. Tax Planning Measures 4.5. Country Examples 4.6. Social Security Contributions xi August 22, 2005 Time: 15:11 Project: INTRODUCTION.tex Table of Contents 5. Avoidance of Economic Double Taxation of Dividends 5.1. General 5.2. Imputation System v Shareholder Relief System 5.3. Participation Exemption 5.4. European Union Parent-Subsidiary Directive 6. Tax Consolidation Rules ("Group Taxation") 6.1. General 6.2.
Load more

Recommended publications
  • Is Panama Really Your Tax Haven? Secrecy Jurisdictions
    Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm Petr Janský, Markus Meinzer, Miroslav Palanský1 Abstract Secrecy jurisdictions provide services that enable the residents of other countries to escape the laws and regulations of their home economies, evade tax, or hide their legally or illegally obtained assets. Recent offshore leaks offer only a limited and biased view of the world of financial secrecy. In this paper we quantify which secrecy jurisdictions provide secrecy to which countries and assess how successful countries are in targeting these jurisdictions with their policies. To that objective we develop the Bilateral Financial Secrecy Index (BFSI) and estimate it for 86 countries by quantifying the financial secrecy supplied to them by up to 100 secrecy jurisdictions. We then evaluate two major recent policy efforts by comparing them with the results of the BFSI. First, we focus on the blacklisting process of the European Commission and find that most of the important secrecy jurisdictions for EU member states have been identified by the lists. Second, we link the results to data on active bilateral automatic information exchange treaties to assess how well- aimed are the policymakers’ limited resources. We argue that while low-secrecy jurisdictions’ gains are maximized if a large share of received secrecy is covered by automatic information exchange, tax havens aim not to activate these relationships with countries to which they supply secrecy. Our results show that so far, some major secrecy jurisdictions successfully keep their most prominent relationships uncovered by automatic information exchange, and activating these relationships may thus be an effective tool to curb secrecy.
    [Show full text]
  • Saleh Poll Tax December 2011
    On the Road to Heaven: Poll tax, Religion, and Human Capital in Medieval and Modern Egypt Mohamed Saleh* University of Southern California (Preliminary and Incomplete: December 1, 2011) Abstract In the Middle East, non-Muslims are, on average, better off than the Muslim majority. I trace the origins of the phenomenon in Egypt to the imposition of the poll tax on non- Muslims upon the Islamic Conquest of the then-Coptic Christian Egypt in 640. The tax, which remained until 1855, led to the conversion of poor Copts to Islam to avoid paying the tax, and to the shrinking of Copts to a better off minority. Using new data sources that I digitized, including the 1848 and 1868 census manuscripts, I provide empirical evidence to support the hypothesis. I find that the spatial variation in poll tax enforcement and tax elasticity of conversion, measured by four historical factors, predicts the variation in the Coptic population share in the 19th century, which is, in turn, inversely related to the magnitude of the Coptic-Muslim gap, as predicted by the hypothesis. The four factors are: (i) the 8th and 9th centuries tax revolts, (ii) the Arab immigration waves to Egypt in the 7th to 9th centuries, (iii) the Coptic churches and monasteries in the 12th and 15th centuries, and (iv) the route of the Holy Family in Egypt. I draw on a wide range of qualitative evidence to support these findings. Keywords: Islamic poll tax; Copts, Islamic Conquest; Conversion; Middle East JEL Classification: N35 * The author is a PhD candidate at the Department of Economics, University of Southern California (E- mail: [email protected]).
    [Show full text]
  • Fixing U.S. International Taxation
    DANIEL N. SHAVIRO FIXING U.S. INTERNATIONAL TAXATION 2 FIXING U.S. INTERNATIONAL TAXATION (forthcoming Oxford University Press, 2014) Daniel N. Shaviro June 2013 All Rights Reserved 2 1. INTRODUCTION AND OVERVIEW A Fork in the Road? Yogi Berra once offered the advice, “When you come to a fork in the road, take it.” He could almost have been speaking about the U.S. international tax rules, which govern how we tax cross-border or multinational investment. For “outbound” investment, or that earned abroad by U.S. companies, the U.S. rules, for almost a century, have muddled along in the netherworld between two sharply etched approaches that dominate the literature, each intuitively appealing but utterly inconsistent with the other. The first approach is called worldwide or residence-based taxation. Under it, the U.S. would impose tax at the same rate on U.S. companies’ foreign source income (FSI) as on their domestic income. The great apparent virtue of this approach is that it would prevent the companies from reducing their U.S. tax liability by investing (or reporting income) abroad rather than at home. The second approach is called source-based or territorial taxation. Under it, the U.S., recognizing that foreign companies pay no U.S. tax when they invest abroad, would extend this same U.S. tax exemption for FSI to its own companies. (This approach is therefore also called exemption). The great apparent virtue of this approach is that it would avoid placing U.S. companies under a competitive disadvantage, as compared to their foreign rivals, when they invest abroad.
    [Show full text]
  • EMERGING ISSUES in INTERNATIONAL TAXATION – CHALLENGES and WAY FORWARD by PATIENCE T
    EMERGING ISSUES IN INTERNATIONAL TAXATION – CHALLENGES AND WAY FORWARD By PATIENCE T. RUBAGUMYA COMMISSIONER LEGAL SERVICES AND BOARD AFFAIRS OUTLINE L 1 Introduction 2 Challenges in international taxation taxation 3 Proposed Way forward 4 Conclusion INTRODUCTION Structure of Budget Financing in Uganda and most African Countries: • Reliance on taxes to fund current and development expenditure • About 70% of the taxes are collected from domestic resources • Domestic resource mobilization is therefore key for sustainable development and thus the focus is now on international taxation and implementing strategies to enhance compliance with Transfer Pricing Regulations, Preventing Treaty Abuse and Policy redesign CHALLENGES Treaty Abuse: • This is a realistic challenge. Most treaties in developing countries are being abused due to inadequacy of the beneficial ownership anti provision. • Treaties are vulnerable to abuse and this is as a result of the way the provisions in those treaties are structured and as such the vice of treaty shopping is prevalent. CHALLENGES • Lack of information about worldwide activities and operations of multinational entities and finding comparable data for transfer pricing cases. • The MNEs create cash boxes in preferential tax regimes jurisdictions and these erode the tax base of developing countries through the payments of royalties and interest without substantial presence and value creation in such jurisdictions. CHALLENGES • Inadequate capacity of staff International taxation is complex, takes about four years to build expertise of tax official in international taxation matters. • Limited financing for capacity building programmes in the face of competing demands for resources which thus undermines domestic resource mobilization efforts. CHALLENGES- EXTRACTIVES • Some developing countries have significant oil reserves and other natural resources and often the right to tax income from the activities relating to exploitation of such resources is often an area of disputes that end up in costly international arbitration cases.
    [Show full text]
  • How Do Tax Progressivity and Household Heterogeneity Affect
    How Do Tax Progressivity and Household Heterogeneity Affect Laffer Curves?∗ Hans A. Holtery Dirk Kruegerz Serhiy Stepanchukx March 12, 2019 Abstract: How much additional tax revenue can the government generate by increasing the level of labor income taxes? In this paper we argue that the degree of tax progressivity is a quantitatively important determinant of the answer to this question. To make this point we develop a large scale overlapping generations model with single and married households facing idiosyncratic income risk, extensive and intensive margins of labor supply, as well as endogenous accumulation of human capital through labor market experience. We calibrate the model to U.S. macro, micro and tax data and characterize the labor income tax Laffer curve for various degrees of tax progressivity. We find that the peak of the U.S. Laffer curve is attained at an average labor income tax rate of 58%. This peak (the maximal tax revenues the government can raise) increases by 7% if the current progressive tax code is replaced with a flat labor income tax. Replacing the current U.S. tax system with one that has Denmark's progressivity would lower the peak by 8%. We show that modeling the extensive margin of labor supply and endogenous human capital accumulation is crucial for these findings. With joint taxation of married couples (as in the U.S.), higher tax progressivity leads to significantly lower labor force participation of married women and substantially higher labor force participation of single women, an effect that is especially pronounced when future wages of females depend positively on past labor market experience.
    [Show full text]
  • School Finance Tutorial
    Public School Finance Seminar David Anderson Lisa Dawn-Fisher Texas Education Agency Big Picture of School Finance • The system is huge o Annual state aid and local taxes exceed $48.7 billion o 1% error in projecting state cost is worth $370 million in a biennium o It takes large amounts of money to make meaningful change in a system this large Sources of Funds Other local, $1.43 Local I&S taxes, $3.94 State Foundation*, $16.67 Local M&O taxes, $17.23 State Available*, $1.13 State Textbook, $0.17 State GR, $0.79 Federal, $7.19 Technology, $0.13 2009–2010 Estimated, $48.7 billion total (*includes SFSF) Big Picture of School Finance • Wealth is tax base per student, not absolute o A penny of tax rate in Houston ISD generates $10.8 million o A penny of tax rate in Divide ISD generates $5,397 • BUT, o At $1.00 tax rate, Houston ISD produces $5,989 per ADA o At $1.00 tax rate, Divide ISD produces $25,555 per ADA Big Picture of School Finance • Putting local property taxes into perspective o At a $1.00 tax rate, it takes $800,000 in taxable property value to generate $8,000 in local property taxes Three Basic Variables • Number of students o More students increase state cost o Fewer students decrease state cost • Property values o Higher values save the state general revenue (GR) o Lower values cost the state GR Three Basic Variables • Tax rates o In general Higher tax rates increase state cost and local budgets Lower tax rates decrease state cost and local budgets • BUT, o Rate compression costs the state One penny reduction in local tax
    [Show full text]
  • The Financial Secrecy Index: Shedding New Light on the Geography of Secrecy
    The Financial Secrecy Index: Shedding New Light on the Geography of Secrecy Alex Cobham, Petr Janský, and Markus Meinzer Abstract Both academic research and public policy debate around tax havens and offshore finance typically suffer from a lack of definitional consistency. Unsurprisingly then, there is little agreement about which jurisdictions ought to be considered as tax havens—or which policy measures would result in their not being so considered. In this article we explore and make operational an alternative concept, that of a secrecy jurisdiction and present the findings of the resulting Financial Secrecy Index (FSI). The FSI ranks countries and jurisdictions according to their contribution to opacity in global financial flows, revealing a quite different geography of financial secrecy from the image of small island tax havens that may still dominate popular perceptions and some of the literature on offshore finance. Some major (secrecy-supplying) economies now come into focus. Instead of a binary division between tax havens and others, the results show a secrecy spectrum, on which all jurisdictions can be situated, and that adjustment lfor the scale of business is necessary in order to compare impact propensity. This approach has the potential to support more precise and granular research findings and policy recommendations. JEL Codes: F36, F65 Working Paper 404 www.cgdev.org May 2015 The Financial Secrecy Index: Shedding New Light on the Geography of Secrecy Alex Cobham Tax Justice Network Petr Janský Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague Markus Meinzer Tax Justice Network A version of this paper is published in Economic Geography (July 2015).
    [Show full text]
  • The Relationship Between MNE Tax Haven Use and FDI Into Developing Economies Characterized by Capital Flight
    1 The relationship between MNE tax haven use and FDI into developing economies characterized by capital flight By Ali Ahmed, Chris Jones and Yama Temouri* The use of tax havens by multinationals is a pervasive activity in international business. However, we know little about the complementary relationship between tax haven use and foreign direct investment (FDI) in the developing world. Drawing on internalization theory, we develop a conceptual framework that explores this relationship and allows us to contribute to the literature on the determinants of tax haven use by developed-country multinationals. Using a large, firm-level data set, we test the model and find a strong positive association between tax haven use and FDI into countries characterized by low economic development and extreme levels of capital flight. This paper contributes to the literature by adding an important dimension to our understanding of the motives for which MNEs invest in tax havens and has important policy implications at both the domestic and the international level. Keywords: capital flight, economic development, institutions, tax havens, wealth extraction 1. Introduction Multinational enterprises (MNEs) from the developed world own different types of subsidiaries in increasingly complex networks across the globe. Some of the foreign host locations are characterized by light-touch regulation and secrecy, as well as low tax rates on financial capital. These so-called tax havens have received widespread media attention in recent years. In this paper, we explore the relationship between tax haven use and foreign direct investment (FDI) in developing countries, which are often characterized by weak institutions, market imperfections and a propensity for significant capital flight.
    [Show full text]
  • Progressive Taxation, Nominal Wage Rigidity, and Business Cycle Destabilization
    Progressive Taxation, Nominal Wage Rigidity, and Business Cycle Destabilization Miroslav Gabrovski Jang-Ting Guo University of Hawaii at Manoay University of California, Riversidez February 1, 2019 Abstract In the context of a prototypical New Keynesian model, this paper examines the theo- retical interrelations between two tractable formulations of progressive taxation on labor income versus (i) the equilibrium degree of nominal wage rigidity as well as (ii) the re- sulting volatilities of hours worked and output in response to a monetary shock. In sharp contrast to the traditional stabilization view, we analytically show that linearly progressive taxation always operates like an automatic destabilizer which leads to higher cyclical ‡uc- tuations within the macroeconomy. We also obtain the same business cycle destabilization result under continuously progressive taxation if the initial degree of tax progressivity is su¢ cient low. Keywords: Progressive Taxation, Nominal Wage Rigidity, Automatic Stabilizer, Business Cycles. JEL Classi…cation: E12, E32, E62, We thank Nicolas Caramp, Juin-Jen Chang, Yi Mao, Victor Ortego-Marti, Chong-Kee Yip, and seminar participants at Academia Sinica and Chinese University of Hong Kong for helpful comments and suggestions. Part of this research was conducted while Guo was a visiting research fellow at the Institute of Economics, Academia Sinica, whose hospitality is greatly appreciated. Of course, all remaining errors are own own. yDepartment of Economics, University of Hawaii at Manoa, 2424 Maile Way, Saunders 516, Honolulu, HI 96822, USA; Phone: 1-808-956-7749, Fax: 1-808-956-4347, E-mail: [email protected] zCorresponding Author. Department of Economics, 3133 Sproul Hall, University of California, Riverside, CA 92521, USA; Phone: 1-951-827-1588, Fax: 1-951-827-5685, E-mail: [email protected].
    [Show full text]
  • Rethinking Tax: the Shift to Indirect Tax
    Rethinking tax: The shift to indirect tax The global tax landscape is going through a period of fundamental change. Governments are now rethinking how taxes are levied. Changes have been triggered by the rapid spread of technology, new supply chains, debt pressures, and an increased scrutiny of multinational tax practices. More than ever, tax is a top priority for businesses, as sweeping changes, brought in through the Organisation for Economic Cooperation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) recommendations, transform the way they operate. Whilst corporate tax avoidance continues to grab system. Just next door, Bangladesh has plans to headlines, some of the biggest reforms are in fact implement a new VAT in July. The Middle East occurring within indirect tax. This year, two of are also expecting momentous changes. In a move the world’s most populous countries – China and to generate additional revenue and diversify the India – are expected to transform their indirect tax economy, the Gulf Cooperation Council (GCC) systems. China is set to complete the final stage countries – Saudi Arabia, Kuwait, the United Arab of its Value Added Tax (VAT) reform, whilst Emirates, Qatar, Bahrain, and Oman – are expected India is expected to introduce its long-awaited to levy VAT from 2018. comprehensive Goods and Services Tax (GST) Rethinking tax: The shift to indirect tax Countries transforming their indirect tax regimes or introducing VAT/GST China India Bangladesh Puerto Rico Kuwait Bahrain Qatar UAE Saudi Arabia Oman These upcoming changes are all off the back of The shift to indirect tax will transform the way Malaysia’s successful GST regime introduction businesses operate within these countries.
    [Show full text]
  • The Theory of International Tax Competition and Coordination
    CHAPTER 5 The Theory of International Tax Competition and Coordination Michael Keen* and Kai A. Konrad†,‡ *International Monetary Fund, Fiscal Affairs Department,Washington DC 20431, USA †Max Planck Institute for Tax Law and Public Finance, Marstallplatz 1, 80539 Munich, Germany ‡Social Science Research Center Berlin, Germany Contents 1. Introduction 258 2. Uncoordinated Actions 262 2.1. Workhorse Models 263 2.1.1. The Zodrow, Mieszkowski, and Wilson (ZMW) Model 263 2.1.2. The Kanbur-Keen (KK) Model 275 2.2. Sequential Decision Making 278 2.3. Pure Profits and International Portfolio Diversification 282 2.4. Tax Competition with Multiple Instruments 284 2.5. Vertical Externalities and the Strategic Role of Internal Governance Structure 285 3. Coordination 288 3.1. Asymmetries and the Limits of Harmonization 289 3.2. Minimum Tax Rates 289 3.3. Coordination Among a Subset of Countries 293 3.4. Coordination Across a Subset of Instruments 295 3.5. Dynamic Aspects 296 3.5.1. Infinitely Repeated Interaction 296 3.5.2. Endogenous Savings and Time Consistent Taxation 298 3.5.3. Stock Effects and Agglomeration 302 4. Broadening the Perspective 303 4.1. Bidding for Firms 303 4.2. Preferential Regimes 305 4.3. Information Exchange and Implementation of the Residence Principle 308 4.4. Tax Havens 311 4.4.1. Which Countries Become Tax Havens? 311 4.4.2. Are Tax Havens Good or Bad? 312 4.4.3. Closing Down Tax Havens 314 4.5. Formula Apportionment 315 4.6. Political Economy and Agency Issues 318 4.6.1. Tax Competition and Leviathan 318 4.6.2.
    [Show full text]
  • CPA's Guide to Benefit Plans for Small Business
    University of Mississippi eGrove American Institute of Certified Public Guides, Handbooks and Manuals Accountants (AICPA) Historical Collection 1999 CPA's guide to benefit plans for small business James R. Hamill Follow this and additional works at: https://egrove.olemiss.edu/aicpa_guides Part of the Accounting Commons, and the Taxation Commons A CPA’s Guide to Benefit Plans for Small Business James R. Hamil, CPA, Ph.D. A CPA’s Guide to Benefit Plans for Small Business James R. Hamil, CPA, Ph.D. NOTICE TO READERS A CPA's Guide to Benefit Plans for Small Business does not represent an official position of the American Institute of Certified Public Accountants, and it is distributed with the understanding that the author and publisher are nor rendering legal, accounting or other professional services in this publication. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Copyright © 1999 by American Institute of Certified Public Accountants, Inc., New York, NY 10036-8775 All rights reserved. For information about permission to copy any part of this work for redistribution or for inclusion in another document or manuscript, please call the AICPA Copyright Permissions Hotline at 201-938-3245. A Permission Request Form for emailing requests is available at www.aicpa.org by clicking on the copyright notice on any page. Otherwise, requests should be written and mailed to the Permissions Department, AICPA, Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881. 1234567890PP 99 ISBN 0-87051-255-2 FOREWORD This book covers the full range of popular benefit and welfare plans currently used by closely held businesses to assemble attractive, tax-wise employee compensation packages.
    [Show full text]