Category: Base Erosion & Profit Shifting

China’s new Enterprise Income Tax regulation and its impact on international transportation business

As reported in Clyde & Co’s 2011 article titled ‘Chinese charterers deducting taxes from hire payments’ (click here to view), foreign vessel owners engaged in business with Chinese charterers have long faced China’s Enterprise Income Tax regime (“EIT”). That regime looks set to extend further into the international transportation sector… – Continue reading

No Need To Envy Tax-Inversion Takeovers: Better Tax Deal Awaits

Watching big pharmaceutical companies and other major U.S. corporations line up to make foreign acquisitions that will bring them a low-tax haven as headquarters, a middle market CEO/owner/entrepreneur could easily become jealous. Are you feeling stuck with an effective tax rate of 25%, 30% or even 35%? For the likes… – Continue reading

ICC Tells Countries To Resist Exit Taxes On MNEs

The International Chamber of Commerce, in a policy statement on July 15, 2014, has advised countries not to adopt exit taxes, to ensure that double taxation is avoided and to promote the free movement of capital. In its statement, entitled “Exit taxes: Serious obstacles for international business restructurings and movements… – Continue reading

Romania: 28 suspects of tax evasion on fruits and vegetables under questioning

28 suspects of evading taxes on fruit and vegetable products are under questioning by prosecutors of the DIICOT. These include two officials from the National Agency for Fiscal Administration (NAFA). Prosecutors of the DIICOT Bucharest, along with officers from the Bucharest Organised Crime Squad, conducted 46 searches on Wednesday in… – Continue reading

India-UK commit to jointly deal with tax evasion menace

NEW DELHI: India and the UK today expressed the determination to work together to tackle the menace of tax evasion even as Britain agreed to support infrastructure projects in the country. UK Export Finance will provide a line of credit of one billion pounds (about Rs 10,000 crore) for the… – Continue reading

Hockey to tighten tax laws for multinationals but loopholes still exist

Treasurer Joe Hockey has said that he will improve the structural integrity of Australia’s tax system to address international tax avoidance by multinational enterprises. In particular, the tax law will be tightened to prevent a multinational from shifting profits from Australia by claiming excess interest expense deductions. This tax avoidance technique is… – Continue reading

Fiat™s Andrea Bonzano talks BEPS, formulary apportionment and the profit split method

Andrea Bonzano, head of tax at Fiat, discusses the pros and cons of different transfer pricing methods in an interview with TPWeek, and provides his views on BEPS and US inversions. Bonzano has expressed his views on some of the most topical transfer pricing issues, discussing his concerns over BEPS… – Continue reading

Standing up to scrutiny: Balancing the risks and rewards in transfer pricing documentation

Increasing sophistication in combatting base erosion and profit shifting, and the corresponding increase in transfer pricing documentation, have posed a challenge for businesses. The following article considers the tension between the competing demands. Companies are facing a proliferation of transfer pricing documentation demands. While the new requirements set out in… – Continue reading

New Zealand Joins OECD In Plan To Stop Multinational Profit Shifting

WELLINGTON, June 23 (Bernama) — New Zealand tax officials are helping the Organisation for Economic Co-operation and Development (OECD) group of developed nations to deliver the first part of a plan to stop base erosion and profit shifting, Revenue Minister Todd McClay said Monday.The first seven “deliverables” of a 15-point… – Continue reading

Ireland in trouble with EU over possible Apple Inc. (AAPL) tax haven

In an era when many companies seek international solutions that in simpler times might have been openly labeled “tax evasion,” governments around the world are seeking to ensure they are not cheated of legally due taxes by what is now euphemistically called “profit shifting.” Apple Inc. (AAPL) has been keeping… – Continue reading

Half trillion dollars cash offshore as 14 US tech & pharma groups cut foreign tax rate to 10%

The Financial Times says today that 14 US tech & pharma groups, including  Microsoft, Google and Johnson & Johnson, have cut their average tax rate by a quarter over the past eight years as they parked more cash offshore than all other US companies combined. Almost a half trillion dollars… – Continue reading

Apple’s principal Irish company became stateless for tax purposes from 2006

Apple Operations International, the principal Irish holding company for foreign subsidiaries, was not always stateless for tax purposes based on the last filed accounts in Ireland. It stopped paying tax in Ireland from 2006, based on US Senate Permanent Subcommittee on Investigations evidence. The most explosive revelation in the May… – Continue reading

Apple’s principal Irish company became stateless for tax purposes from 2006

Apple Operations International, the principal Irish holding company for foreign subsidiaries, was not always stateless for tax purposes based on the last filed accounts in Ireland. It stopped paying tax in Ireland from 2006, based on US Senate Permanent Subcommittee on Investigations evidence. The most explosive revelation in the May… – Continue reading

Data ‘dance’ seen as challenge to world corporate tax crackdown

WASHINGTON (Reuters) – Cracking down on corporate tax avoidance sounds like a winner, and officials are working on it, but the practical challenges are formidable and they dominated discussion at an Organisation for Economic Co-operation and Development conference on Tuesday. The OECD, a Paris-based club of large economies, has an… – Continue reading

Illinois parts-maker fights U.S. IRS over cross-border tax deal

The U.S. Internal Revenue Service and manufacturer Illinois Tool Works Inc. are battling in U.S. Tax Court over a $356.8 million dispute that highlights a type of cross-border tax avoidance strategy facing increased scrutiny worldwide. As governments crack down on tax-driven profit-shifting, the IRS is asserting that a loan used… – Continue reading

Ireland in U-turn on corporate tax avoidance; Accepts reality of reform

Having spent the past eighteen months claiming that Ireland does not facilitate international corporate tax avoidance despite overwhelming evidence to the contrary, the Irish Government has done a U-turn and has signalled that it is ready to prepare for the reality of reform. On Tuesday the Department of Finance published… – Continue reading

U.S. Republican tax writers criticize global corporate tax project

Republican tax law writers in the U.S. Congress and multinational businesses on Monday said international talks aimed at preventing companies from moving profits to low-tax countries could hurt the United States. Representative Dave Camp and Senator Orrin Hatch of Utah warned of the effect on U.S. taxpayers from the Organisation… – Continue reading

US Tax Cheats in Ireland Pocket Profits Worth Almost Half of GDP

It is a figure which Citizens for Tax Justice (CTJ), the US group which authored the report, says highlights Ireland’s popular use as a tax haven among US companies. Matt Gardner, executive director of the Institute on Taxation and Policy in Washington DC, tells IBTimes UK: “It’s a clear indicator… – Continue reading

WARNING: The ATO Is Aggressively Targeting Australian Companies Doing Business Offshore

International moves to shut down profit-shifting from high to low tax countries is starting to have an impact on Australian companies doing business offshore. A new EY report says these local companies are feeling the heat of a global trend of “increasingly aggressive” tax authorities. EY’s 2014 Tax Risk and… – Continue reading

Consultation puts tax law plans in spotlight

THE Department of Finance has launched a public consultation on how Ireland’s tax system might respond to proposed international changes. The Organisation for Economic Cooperation and Development (OECD) is already conducting a public discussion around its Base Erosion and Profit shifting (BEPs) project, which could see tax avoidance loopholes shut… – Continue reading

Amazon Facing Fresh UK Tax Avoidance Row

The internet retail giant Amazon is facing fresh claims of tax avoidance after its latest accounts showed it routed more than £11 billion through its Luxembourg-based subsidiary in 2013 – yet paid only £4 million in UK corporation tax last year. Amazon trades through the Luxembourg subsidiary, Amazon EU SARL,… – Continue reading

Transfer Pricing: BEPS And New Documentation Requirements

Introduction Successive surveys of tax executives and senior finance professionals at multinational companies show that risks associated with transfer pricing have become the number one tax-related concern for businesses operating across several jurisdictions. Ernst and Young’s (EY’s) latest Global Transfer Pricing Survey shows that businesses are taking increasing heed of… – Continue reading

Australia can’t stop multinational profit shifting in isolation

When Business Council of Australia chief Jennifer Westacott weighed in on plans for an Australian tax crackdown on multinationals last week, she warned the move could risk competitiveness and lead to companies being double taxed. Last year the Australian government passed new laws to prevent multinational companies shifting their profits to avoid the payment… – Continue reading

Latest from the U.S. on Five of the OECD BEPS Action Items

Robert Stack, deputy assistant secretary for international tax affairs with the U.S. Treasury, gave an update on several items in the OECD’s project to combat base erosion and profit shifting at the American Bar Association Section of Taxation’s May meeting. As reported more fully by Transfer Pricing Report’s Kevin Bell, Stack,… – Continue reading

Corporate Tax: Apple, Google, Dr Dre & Ireland’s continuing stateless companies

Corporate Tax Avoidance: Last week the news that Apple is considering buying Beats Electronics, a maker of expensive headphones that was founded by record mogul Jimmy Iovine and rap artist Dr Dre, for $3.2bn, got a lot of media attention. Dr Dre must have pissed-off Apple when he bragged on… – Continue reading

Caterpillar Dodged Billions in Taxes for Over a Decade

Caterpillar, industrial and construction equipment manufacturing Goliath, has been avoiding or deferring paying U.S. taxes for at least 13 years to the tune of approximately $2.4 billion, according to a report from the Homeland Security & Government Affairs Permanent Subcommittee on Investigations. “Tax evasion schemes rob the system of billions of… – Continue reading

Transfer pricing: FinMin pulled out of conciliation talks with Vodafone as company was for global arbitration

Finmin says it decided to propose withdrawal of conciliation offer after Vodafone said it could be resolved only through international arbitration The finance ministry on Monday said it had decided to propose withdrawal of its conciliation offer to Vodafone after the British telecom company said the transfer-pricing issue could be… – Continue reading

Africa’s Poorest Nations Lose Billions to Complex Tax Evasion Schemes

African countries are losing up to 12.7% of their national GDP due to shady practices in international trade. Global Financial Integrity, a Washington DC-based think-tank, reports that $542bn (£321bn) worth of capital was lost from Africa in illicit capital flows and estimates that almost 80% of this coming through “trade… – Continue reading

Cairn India contests retro tax in HC after I-T dept attaches assets

Oil major Cairn India and its former British parent Cairn Energy Plc have moved the Delhi High Court challenging the validity of New Delhi’s controversial 2012 retrospective amendment to law that imposed tax liabilities on several high-profile offshore transactions of Indian assets including Cairn’s. The court will take up the… – Continue reading

Govt plan to drop conciliation offer prompted Vodafone arbitration move

Telecom major Vodafone‘s international arbitration notice in its Rs 24,000-crore tax dispute with the government came after the income tax department decided to withdraw its conciliation offer in the matter without waiting for a tribunal’s decision in the transfer pricing case. Officials said the tax department had prepared a Cabinet note to withdraw conciliation on… – Continue reading

Column: Tackling profit-shifting

After years of failing efforts to spur the economy through spending and tax hikes, the developed countries tightened their belts against the perceived flaws in the international tax rules. These countries, which earlier supported globalisation, soon echoed the cries, of the developing countries, stemming from Base Erosion and Profit Shifting… – Continue reading

Transfer pricing: a necessary evil?

Transfer pricing has received a great deal of bad press recently, but it is a useful tool for international businesses, says Lucas Bastin TRANSFER PRICING is the phenomenon by which related corporate entities in different jurisdictions determine the price at which a transfer of goods or services between them should be… – Continue reading

Nigeria, Other African States Seek World Bank’s Assistance on Illicit Financial Flows

By Nduka Nwosu and  Steve Omanufeme  in Washington DC Nigeria and other African countries have asked the Bretton Woods institutions, the World Bank and the International Monetary Fund  (IMF), to help them arrest the intractable problem of illicit financial outflows from the continent. The Coordinating Minister for the Economy (CME)… – Continue reading

Apple’s Offshore Accounting Comes Up Against the SEC, Congress and the IRS

NEW YORK (TheStreet) — The Securities and Exchange Commission is serious about going afterApple’s (AAPL_) off-shore cash. In a letter of comment to Apple’s in-house counsel, SEC accounting branch chief Kathleen Collins challenged the company’s aggressive accounting policies. Apple has about $16 billion of offshore cash exempt from taxation by the Internal… – Continue reading