“The proposed General Anti-Avoidance Rule [UK] [...] attacks arrangements with one or more of these qualities:
(a) arrangements that would result in receipts being taken into account for tax purposes which are significantly less than the true economic income, profit or gain;
(b) arrangements that would result in deductions being taken into account for tax purposes which are significantly greater than the true economic cost or loss;
(c) arrangements that includes a transaction at a value significantly different from market value, or otherwise on non-commercial terms;
(d) arrangements, or any element of it, inconsistent with the legal duties of the parties to it;
(e) arrangements including a person, a transaction, a document or significant terms in a document, which would not be included if the arrangement were not designed to achieve an abusive tax result;
(f) arrangements that omit a person, a transaction, a document or significant terms in a document, which would not be omitted if the arrangement were not designed to achieve an abusive tax result; and
Cartelizing Taxes: Understanding OECD’s Campaign Against ‘Harmful Tax Competition’:
Formed in 1961 to promote global economic and social well-being, the Organization for Economic Cooperation and Development (OECD) has become the collective voice of rich countries on international tax issues. After an initial focus on improving commerce through addressing double taxation issues, the organization shifted to a focus on restricting tax competition and increasing automatic exchanges of tax information. In this paper we analyze the reasons for this shift in policy focus. After describing the history of the OECD’s work on taxation, we examine the OECD’s project against “harmful tax competition” as it has played out since its launch in the 1990s. We analyze the mechanisms behind the project from a public choice perspective. While typical economic models portray tax competition as a prisoner’s dilemma between governments, a more powerful perspective is of the incentives of politicians and bureaucrats. We conclude that the project against tax competition is an example of the interplay between the interests of politicians and international bureaucrats, which illustrates the role international organizations play in competition among interest groups. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1950627
Cf. Joining the Chorus for Tax Cooperation:
[...] But international organizations aren’t the only ones that are destroying jobs and economic opportunity in the name of tax fairness. The U.S. Treasury and Internal Revenue Service are considering regulations that could cost Americans millions of jobs. One of the regulations being developed stems from the Foreign Account Tax Compliance Act (FATCA), which was passed by Congress in 2010. FATCA would impose a 30 percent tax on the investment in the United States of any foreign financial institution, including a bank, if it had any unreported U.S. citizen or green card holder contributing to the pool of money invested. Furthermore, the foreign financial institution’s officers could be subject to civil and criminal charges for making such an investment. In an era of common dual citizenships, it is impossible for a foreign financial institution to know for certain whether any of its clients is a U.S. taxpayer (i.e., citizen, green card holder, etc.). Thus, foreign financial institutions in Switzerland, Taiwan and elsewhere are pulling their investments out of the United States right at the time when the U.S. needs all of the job-creating foreign investment it can get.
Sen. Carl Levin, Michigan Democrat, and the other economic-know-nothings who proposed these measures claim — without any basis in fact — that the United States is losing $100 billion annually because of foreign account tax avoidance or evasion. Private foreign investment in the U.S. is about $14 trillion. So $100 billion is less than 1 percent of the private foreign investment, yet the mental midgets in Congress and the administration are willing to risk trillions of dollars in job-creating foreign investment in exchange for a phony $100 billion. Well over 10 million American jobs are at risk because of this foolishness.
It gets worse. The Treasury and IRS have yet to do a cost-benefit study of FATCA, but final regulations are being developed. In the private sector, executives who so failed at their fiduciary responsibilities would be fired, perhaps fined or even sent to jail. But members of Congress and the executive branch are most unlikely to pay any penalty for risking perhaps 20 to 40 jobs for each job they might, theoretically, save. By the way, many of the senators and congressmen who brought you FATCA are the same ones who want to continue to fund the OECD. Mr. President, if you really care about jobs in the way you say you do, why are you not calling for the repeal of FATCA and reining in Mr. Levin, his colleagues and your own Treasury secretary, who are in the process of endangering far more existing jobs than any of your questionable jobs proposals could possibly create? http://www.cato.org/pub_display.php?pub_id=13832
Monitoring the OECD’s Campaign Against Tax Competition, Fiscal Sovereignty, and Financial Privacy: Strategies for Low-Tax Jurisdictions “The Paris-based Organization for Economic Cooperation and Development has an ongoing anti-tax competition project. This effort is designed to prop up inefficient welfare states in the industrialized world, thus enabling those governments to impose heavier tax burdens without having to fear that labor and capital will migrate to jurisdictions with better tax law. This project received a boost a few years ago when the Obama Administration joined forces with countries such as France and Germany, which resulted in all low-tax jurisdictions agreeing to erode their human rights policies regarding financial privacy. The tide is now turning against high-tax nations – particularly as more people understand that ever-increasing fiscal burdens inevitably lead to Greek-style fiscal collapse. Political changes in the United States further complicate the OECD’s ability to impose bad policy. Because of these developments, lowtax jurisdictions should be especially resistant to new anti-tax competition initiatives at the Bermuda Global Forum.” http://freedomandprosperity.org/files/OECD-Bermuda.pdf
Tax havens: the heart of the global economy “[...] tax havens have grown so fast in the era of globalization, since kind of the 1970s, that they have now become right—they are now right at the heart of the global economy and are absolutely huge. I mean, there are 10—anywhere between 10 and 20 trillion U.S. dollars sitting offshore at the moment. Half of world trade is processed in one way or another through tax havens. It’s all around us, and it’s absolutely huge. [...]” http://www.australia-offshore.com/offshore-banking-and-tax-havens-have-become-the-heart-of-global-economy/
Download a free version of Policy and Choice – on the impact of behavioral economics on government tax and spending policies. The authors take a stream of research which had highlighted particular ‘nudges’ and turn it into a comprehensive framework for thinking about policy in a more realistic world where psychology is incorporated into economic decisionmaking. http://www.brookings.edu/press/Books/2011/policyandchoice.aspx
Cross-Country Comparisons of Corporate Income Taxes
“To our knowledge, this paper provides the most comprehensive analysis of firm-level corporate income
taxes to date. We use publicly available financial statement information for 11,602 public corporations
from 82 countries from 1988 to 2009 to estimate country-level effective tax rates (ETRs). We find
that the location of a multinational and its subsidiaries substantially affects its worldwide ETR. Japanese
firms always faced the highest ETRs. U.S. multinationals are among the highest taxed. Multinationals
based in tax havens face the lowest taxes. We find that ETRs have been falling over the last two decades;
however, the ordinal rank from high-tax countries to low-tax countries has changed little. We also
find little difference between the ETRs of multinationals and domestic-only firms. Besides enhancing
our knowledge about international taxes, these findings should provide some empirical underpinning
for ongoing policy debates about the taxation of multinationals.” http://www.nber.org/papers/w16839.pdf
Common tax rules for companies operating in EU: “How it works
Corporate tax rates in the EU will not change. EU countries will continue to decide on their own corporate tax rates.
When calculating their taxes, companies would have a choice of using the different national systems or the single set of rules.
For example, a company may have operations in four EU countries – three with profits and one with a loss.
The company would be able to file one tax return instead of four. It would add up its profits, subtract its losses and use the common rules to calculate deductions and exemptions – arriving at a single taxable sum.
Each of the four countries would collect taxes on a portion of the taxable sum – based on their national rates. The portion would be calculated through a formula set out by the rules.
For the proposal to become law, the EU’s governments must agree to it after consultation with the European Parliament.” http://ec.europa.eu/news/economy/110318_1_en.htm
Direct taxation remains a national competence. Pragmatic coordination of tax policies is a necessary element of a stronger economic policy coordination in the Euro area to support fiscal consolidation and economic growth. In this context, Member States commit to engage in structured discussions on tax policy issues, notably to ensure the exchange of best practices, avoidance of harmful practices and proposals to fight against fraud and tax evasion.
Developing a common corporate tax base could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies, and to contribute to fiscal sustainability and the competitiveness of European businesses.
The Commission intends to present a legislative proposal on a common consolidated corporate tax base in the coming weeks. [...]”
“[...] The Heads of State or Government agree that the introduction of a financial transaction tax should be explored and developed further at the Euro area, EU and international levels. [...]”
For well over a decade, the Amazon Associates Program has worked with thousands of Illinois residents. Unfortunately, a new state tax law signed by Governor Quinn compels us to terminate this program for Illinois-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by Illinois-based affiliates like you – even if those retailers have no physical presence in the state.
We had opposed this new tax law because it is unconstitutional and counterproductive. It was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that its enactment forces this action.
As a result of the new law, contracts with all Illinois affiliates of the Amazon Associates Program will be terminated and those Illinois residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, or SmallParts.com. Please be assured that all qualifying advertising fees earned prior to April 15, 2011 will be processed and paid in full in accordance with the regular payment schedule. Based on your account closure date of April 15, 2011, any final payments will be paid by July 1, 2011.
You are receiving this email because our records indicate that you are a resident of Illinois. If you are not currently a permanent resident of Illinois, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state after April 15, please contact us for reinstatement into the Amazon Associates Program.
To be clear, this development will only impact our ability to continue the Associates Program in Illinois, and will not affect the ability of Illinois residents to purchase online at http://www.amazon.com from Amazon’s retail business.
We have enjoyed working with you and other Illinois-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Illinois residents.
“It is one of the strangest and most important financial whistleblower cases of all time.
Bradley Birkenfeld once lived the high life as secret Swiss banker at UBS in Geneva. Then he delivered some of the world’s best-kept secrets to the US government, expecting a great reward. And now he sits in federal prison in Pennsylvania [...]“: http://www.cnbc.com/id/41257962
Forget about the Gates Foundation. The world’s biggest charity owns IKEA—and is devoted to interior design: “[...] The overall set-up of IKEA minimises tax and disclosure, handsomely rewards the founding Kamprad family and makes IKEA immune to a takeover. And if that seems too good to be true, it is: these arrangements are extremely hard to undo. [...]” https://www.economist.com/node/6919139?story_id=6919139
Are they angry that these firms are legally trying to minimize tax? If so, they must not understand that management has a fiduciary obligation to maximize after-tax returns for shareholders.
Are they implying that these businesses are cheating on their tax returns? If so, they clearly do not understand the difference between tax avoidance and tax evasion.
Are they agitating for governments to impose worldwide taxation so that companies are double-taxed on any income earned (and already subject to tax) in other jurisdictions? If so, they should forthrightly admit this is their goal, notwithstanding the destructive, anti-competitive impact of such a policy.
Or, perhaps, could it be the case that leftists on both sides of the Atlantic don’t like tax competition? But rather than openly argue for tax harmonization and other policies that would lead to higher taxes and a loss of fiscal sovereignty, they think they will have more luck expanding the power of government by employing demagoguery against the big, bad, multinational companies and small, low-tax jurisdictions.
To give these statists credit, they are being smart. Tax competition almost certainly is the biggest impediment that now exists to restrain big government. Greedy politicians understand that high taxes may simply lead the geese with the golden eggs to fly across the border. Indeed, competition between governments is surely the main reason that tax rates have dropped so dramatically in the past 30 years. This video explains”
I want to thank John H, one of my avid readers, for sharing this important information with us.
Below you will find a machine translation of the Tax agreement that is to be signed by Panama and the U.S. on the 30th of November. I have also included an article from La Prensa with comments by the Minister of Finance and other interested parties.
My understanding after reading these brief 12 articles is that it gives the U.S. complete access to any information it may request on any U.S. resident or citizen who it believes may hold assets in Panama. [...]
“[...] in many respects the Rolling Stones are like any other large business. They are global, they pay taxes (grudgingly), and they litigate. The band has a P&L and budgets, and accountants, and lawyers, and bankers, and investments, and software, and hardware. “They know what they’re doing,” says Barry Diller, a Jagger confidant. “That’s what separates them from any other band.” [...]
Connected to the Stones partnership and Prince Rupert is a group of companies that include Promotour, Promopub, Promotone, and Musidor, each dedicated to a particular aspect of the business. This family of companies is based in the Netherlands, which has tax advantages for foreign bands. When the group isn’t touring, these companies employ only a few dozen employees. At the high-water mark of a tour, on the night the band is playing, say, Giants Stadium, the Stones may employ more than 350. Backstage the enterprise resembles a flourishing startup, with dozens of fast-moving junior employees in black T-shirts running around to make sure the IPO, er, the show, gets off without a hitch. It looks crazy, but it works. Perhaps Keith sums it up best: “With our business, who really knows what’s what. You go and look at Lake Superior, and you say, ‘Look at all that water, and that’s just the top!’” [...]
The Stones are famously tax-averse. I broach the subject with Keith in Camp X-Ray, as he calls his backstage lair. There is incense in the air and Ronnie Wood drifts in and out–it is, in other words, a perfect venue for such a discussion. “The whole business thing is predicated a lot on the tax laws,” says Keith, Marlboro in one hand, vodka and juice in the other. “It’s why we rehearse in Canada and not in the U.S. A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we’d be paying 98 cents on the dollar. We left, and they lost out. No taxes at all. I don’t want to screw anybody out of anything, least of all the governments that I work with. We put 30% in holding until we sort it out.” No wonder Keith chooses to live not in London, or even New York City, but in Weston, Conn.”
“Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization [...]
Google, the third-largest U.S. technology company by market capitalization, hasn’t been accused of breaking tax laws. “Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,” [...]
The tactics of Google and Facebook depend on “transfer pricing,” paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue [...]
Google is “flying a banner of doing no evil, and then they’re perpetrating evil under our noses,” said Abraham J. Briloff, a professor emeritus of accounting at Baruch College in New York who has examined Google’s tax disclosures.
“Who is it that paid for the underlying concept on which they built these billions of dollars of revenues?” Briloff said. “It was paid for by the United States citizenry. [...]
In February, the Obama administration proposed measures to curb shifting profits offshore, part of a package intended to raise $12 billion a year over the coming decade. While the key proposals largely haven’t advanced in Congress, the IRS said in April it would devote additional agents and lawyers to focus on five large transfer pricing arrangements.
Income shifting commonly begins when companies like Google sell or license the foreign rights to intellectual property developed in the U.S. to a subsidiary in a low-tax country. That means foreign profits based on the technology get attributed to the offshore unit, not the parent. Under U.S. tax rules, subsidiaries must pay “arm’s length” prices for the rights — or the amount an unrelated company would.
Because the payments contribute to taxable income, the parent company has an incentive to set them as low as possible. Cutting the foreign subsidiary’s expenses effectively shifts profits overseas.
After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.
The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn’t discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter.
That licensee in turn owns Google Ireland Limited, which employs almost 2,000 people in a silvery glass office building in central Dublin, a block from the city’s Grand Canal. The Dublin subsidiary sells advertising globally and was credited by Google with 88 percent of its $12.5 billion in non-U.S. sales in 2009.
Allocating the revenue to Ireland helps Google avoid income taxes in the U.S., where most of its technology was developed. The arrangement also reduces the company’s liabilities in relatively high-tax European countries where many of its customers are located.
The profits don’t stay with the Dublin subsidiary, which reported pretax income of less than 1 percent of sales in 2008, according to Irish records. That’s largely because it paid $5.4 billion in royalties to Google Ireland Holdings, which has its “effective centre of management” in Bermuda, according to company filings. [...]
Tax planners call such an arrangement a Double Irish because it relies on two Irish companies. One pays royalties to use intellectual property, generating expenses that reduce Irish taxable income. The second collects the royalties in a tax haven like Bermuda, avoiding Irish taxes.
To steer clear of an Irish withholding tax, payments from Google’s Dublin unit don’t go directly to Bermuda. A brief detour to the Netherlands avoids that liability, because Irish tax law exempts certain royalties to companies in other EU- member nations. The fees first go to a Dutch unit, Google Netherlands Holdings B.V., which pays out about 99.8 percent of what it collects to the Bermuda entity, company filings show. The Amsterdam-based subsidiary lists no employees. [...]
Microsoft, based in Redmond, Washington, has also used a Double Irish structure, according to company filings overseas. Forest Laboratories Inc., maker of the antidepressant Lexapro, does as well [...]
While the administration “remains concerned” about potential abuses, officials decided “to defer consideration of how to reform those rules until they can be studied more broadly,” said Sandra Salstrom, a Treasury spokeswoman. The White House still proposes to tax excessive profits of offshore subsidiaries as a curb on income shifting, she said.
The rules for transfer pricing should be replaced with a system that allocates profits among countries the way most U.S. states with a corporate income tax do — based on such aspects as sales or number of employees in each jurisdiction, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan Law School. [...]”
Immigration, Offshoring and American Jobs by Gianmarco I.P. Ottaviano, Giovanni Peri, Greg C. Wright. Abstract: “How many “American jobs” are taken away from US-born workers due to immigration and offshoring? Or is it possible, instead, that immigration and offshoring, by promoting cost-savings and enhanced efficiency in firms, spur the creation of native jobs? We consider a multi-sector version of the Grossman and Rossi-Hansberg (2008) model with a continuum of tasks in each sector and we augment it to include immigrants with heterogeneous productivity in tasks. We use this model to jointly analyze the impact of a reduction in the costs of offshoring and of the costs of immigrating to the U.S. The model predicts that while cheaper offshoring reduces the share of natives among less skilled workers, cheaper immigration does not, but rather reduces the share of offshored jobs instead. Moreover, since both phenomena have a positive “cost-savings” effect they may leave unaffected, or even increase, total native employment of less skilled workers. Our model also predicts that offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive. We test the predictions of the model on data for 58 US manuafacturing industries over the period 2000-2007 and find evidence in favor of a positive productivity effect such that immigration has a positive net effect on native employment while offshoring has no effect on it. We also find some evidence that offshoring has pushed natives toward more communication-intensive tasks while it has pushed immigrants away from them.”
“US Trade Representative Ron Kirk, whose office negotiated the US side of the deal, issued a statement this morning about the “tremendous progress in the fight against counterfeiting and piracy,” but the real story here is the tremendous climbdown by US negotiators, who have largely failed in their attempts to push the Digital Millenium Copyright Act (DMCA) onto the rest of the world.” http://arstechnica.com/tech-policy/news/2010/10/near-final-acta-text-arrives-big-failure-for-us.ars
Mexico:
“it’s not clear exactly how much say the Mexican Senate has here. While the resolution claims that it needs to ratify any such agreements, I don’t know if that’s the case.” Comment: “Actually means a lot, even though is non-binding it was adopted by all every single senator and the final say on international treaties is on the Senate. The President can ratify if he wishes ACTA, but the Senate needs to approve it. And they are not very willing to.” http://www.techdirt.com/articles/20101005/17320811304/mexican-senate-unanimously-votes-to-remove-mexico-from-acta-negotations.shtml
“Switzerland’s tax treaty with Germany may finish banking secrecy in Europe and prompt withdrawals as Swiss banks will no longer guarantee client confidentiality.
The treaty will allow investigators to request Swiss assistance in tracking down undeclared money deposited by German nationals, said Eric Jucker, a Zurich-based tax lawyer. It probably will be signed this month by Swiss Finance Minister Hans-Rudolf Merz and his German counterpart Wolfgang Schaeuble.
Lawmakers introduced legislation yesterday that would let the Justice Department seek U.S. court orders against “piracy” websites anywhere in the world, and shut them down through the sites’ domain registration:
“[...] the court may issue a temporary restraining order, a preliminary injunction, or an injunction against the domain name used by an Internet site dedicated to infringing activities to cease and desist from undertaking any infringing activity in violation of this section [...]” pp. 3-4.
“The Attorney General may commence an in rem action against any domain name used by an Internet site in the judicial district in which the domain name registrar or domain name registry is located [...]” p.4.
“(2) DOMAINS FOR WHICH THE REGISTRY OR REGISTRAR IS NOT LOCATED DOMESTICALLY.— [...] the in rem action may be brought in the District of Columbia to prevent the importation into the United States of goods and services offered by an Internet site dedicated to infringing activities if
(i) the domain name is used to access such Internet site in the United States; and
(ii) the Internet site
(I) conducts business directed to residents of the United States; and
(II) harms intellectual property rights holders that are residents of the United States.” pp. 5-6.
“The Attorney General shall maintain a public listing of domain names that, upon information and reasonable belief, the Department of Justice determines are dedicated to infringing activities but for which the Attorney General has not filed an action under this section. [...] the individual may obtain judicial review of such determination in a civil action commenced not later than 90 days after notice of such decision [...] A civil action for such judicial review shall be brought [...] in the District Court of the United States for the District of Columbia.” pp. 12-13.
> We just reached the 369 signatures of Members of the European Parliament
> required for WD12 to be adopted!!!
>
> Completion of WD12 shows that alltogether we can weight in making the
> European Parliament take care of our fundamental freedoms. With WD12,
> the European Parliament rejects both the un-democratic process of ACTA
> – -whatever the final content of the agreement will be- and its content,
> harmful for fundamental freedoms.
>
> WD12 is a strong political signal sent by the EP to the Commission that
> ACTA is not tolerable as a way of bypassing democratic process; that
> legislation related to Internet, freedom of speech and privacy cannot be
> traded off in secrecy and under full influence of entertainment industry
> lobbies. Whatever the content of the final agreement, ACTA will remain
> an illegitimate circumvention of democracy and should be opposed as such.
>
> Let’s hope that WD12 announces the “consent” vote that the EP will have
> to take in order to accept or reject ACTA when it is finalized. Then
> again, citizens will need to act to make sure that their Internet and
> their fundamental freedoms are properly defended, by a full rejection of
> ACTA.
>
>
> Thanks to everyone who participated in that great effort!
[On Tue, Sep 07, 2010 at 05:10:47PM +0200, Jérémie ZIMMERMANN - La Quadrature du Net wrote]
admin is discussing. 
admin 17:51 on October 31, 2010 Permalink |
http://www.irishtimes.com/newspaper/finance/2010/1025/1224281951684.html