scholarly journals International Tax Planning: The Stop-Loss Rules and Corporate Reorganizations—Interpretive Challenges

2019 ◽  
Vol 67 (2) ◽  
pp. 383-410
Author(s):  
Ian Bradley ◽  
Jonathan Bright
Keyword(s):  
Tax Planning ◽  
Statutory Interpretation ◽  
True Meaning ◽  
International Tax ◽  
Broad Interpretation ◽  
Stop Loss ◽  
Corporate Reorganizations

Tax rules often present interpretive challenges. One such challenge involves the stop-loss rules, which can suspend the recognition of a loss realized on a transfer of shares between affiliated persons. Continuity rules prevent a suspended loss from being released as a result of certain corporate reorganizations. One continuity rule applies to mergers and combinations, while others apply to certain types of windups. The Canada Revenue Agency recently issued a broad interpretation of the former rule, arguing that in this context a "merger or combination" can include a winding up—even if the woundup corporation has multiple shareholders. In this article, the principles of statutory interpretation are applied to the relevant provisions, to determine their true meaning. This analysis indicates that the continuity rule for mergers and combinations does not apply to windups.

scholarly journals The Use of International Tax Planning in Subsidiaries from the Financial and ICT Sectors in the Czech Republic

2021 ◽  
Vol 24 (1) ◽  
pp. 182-196
Author(s):  
Vít Jedlička
Keyword(s):  
Global Economy ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Tax Planning ◽  
Tax Burden ◽  
Effective Tax Rate ◽  
Tax Havens ◽  
Tax Rate ◽  
Dummy Variable ◽  
International Tax

Tax avoidance is an important element of management in the global economy. Managers use tax havens for reducing a company’s effective tax rate. The most common practices in international tax planning can be divided into three groups: loans and their related interest, royalties, and transfer pricing. The aim of this article is to find the determinants of the tax burden faced by foreign-owned subsidiaries. Therefore, a model was created for the tax burden, focusing on the special position of subsidiaries within international tax planning. For this purpose, taxes/outcomes was established as a new dependent variable. The panel data used include Czech companies that are owned by parent companies located in other EU countries. The model distinguishes EU tax havens from regular member states; sector dummy variables are also included. The regression model that was created did not confirm the assumed dependencies. Rather, it indicated other important determinants: profitability, the share of intangible assets, size, and the dummy variable for the ICT sector. Based on the regression results, the independent variables connected with known tax planning schemes have relatively low importance. The significance of these results can be seen in the subsequent conclusions. First of all, there is no difference between the subsidiaries’ tax burdens based on the parent company’s location. Corporations use international tax planning whether or not they are owned from a tax haven. The second significant conclusion indicates the importance of certain sectors and their attributes concerning the tax burden. Companies from the ICT sector are linked to a lower tax burden. On the other hand, the dependencies within the financial sector are not statistically significant. From the perspective of further research, it would be constructive to incorporate the subsidiary’s position within the group.

How Countries Should Share Tax Information

2019 ◽  
pp. 303-322
Author(s):  
Arthur J. Cockfield
Keyword(s):  
Human Rights ◽  
Transaction Costs ◽  
Tax Evasion ◽  
Academic Support ◽  
Tax Planning ◽  
High Quality ◽  
Financial Flows ◽  
Optimal Outcomes ◽  
Illicit Financial Flows ◽  
International Tax

This chapter looks at exchange of information (EOI) policies, proposing several ways to make EOI policies fairer and more efficient, so as to maximize their potential to reduce illicit financial flows and curb abusive tax practices that undermine human rights. While there appears increasing policy and academic support for EOI initiatives that promote global financial transparency, the current international tax regime, with its high transaction costs for taxpayers and tax authorities, does not seem particularly amenable to producing optimal outcomes. The chapter then emphasizes how, to promote enforceability, the ideal EOI system delivers high-quality tax information while providing needed legal protections for taxpayer privacy. The exchange and usage of high-quality tax information would reduce transaction costs for tax authorities as they could more readily identify taxpayers engaged in offshore tax evasion and aggressive international tax planning.

scholarly journals Analyzing and Formulating a Statutory General Anti-Avoidance Rule (GAAR) in Indonesia

2020 ◽  
Vol 15 (1) ◽  
pp. 35
Author(s):  
Suparna Wijaya ◽  
Dewi Sekarsari Kusumaningtyas
Keyword(s):  
Qualitative Research ◽  
Tax Avoidance ◽  
Tax Planning ◽  
Case Study Approach ◽  
Study Approach ◽  
International Tax

Dealing with the practice of tax avoidance in general, many countries have compiled and implemented their own general anti-avoidance rules (GAAR). This research aims to explore the potential of statutory GAAR in handling tax avoidance practices in Indonesia and SAAR formulas that are suitable for the Indonesian context. This qualitative research employed a case study approach. Results show that the application of SAAR and the principle of substance over form in Indonesia cannot yet be applied properly; thus GAAR is needed. It is expected that the implementation of statutory GAAR can accommodate the limitations of regulators in light of unknown and future tax avoidance schemes.. Keywords: Tax-avoidance, tax planning, specific anti avoidance rule (SAAR), international tax

What makes Cyprus Special in International Tax Planning

1996 ◽  
Vol 2 (8) ◽  
pp. 16-17
Author(s):  
D. R. Savvides
Keyword(s):  
Tax Planning ◽  
International Tax

scholarly journals International Tax Planning: The Foreign Affiliate Surplus Reclassification Rule

2019 ◽  
Vol 67 (4) ◽  
pp. 1233-1266
Author(s):  
Gwendolyn Watson
Keyword(s):  
Tax Planning ◽  
Foreign Affiliate ◽  
International Tax ◽  
Tax Savings

Bill C-48, the Technical Tax Amendments Act, 2012, introduced, among other things, several significant changes to the foreign affiliate surplus rules, including the adoption of the surplus reclassification rule in regulation 5907(2.02). The surplus reclassification rule is a broadly worded specific anti-avoidance rule that can apply to reclassify a foreign affiliate's exempt earnings (and exempt surplus) into taxable earnings (and taxable surplus) when the exempt earnings arise from certain tax-motivated dispositions of property. On the basis of a textual, contextual, and purposive interpretation of this provision, the author maintains that the rule should apply only in circumstances involving foreign affiliate surplus stripping—that is, tax-free transactions designed to convert low-taxed taxable surplus into exempt surplus that can be distributed or otherwise relied on to achieve Canadian tax savings.

scholarly journals BUSINESS PURPOSE AS A TAX AVOIDANCE CONDITION IN CORPORATE REORGANIZATIONS

2018 ◽  
Vol 3 (3-4) ◽  
pp. 222-253
Author(s):  
Marciano Buffon ◽  
Isaías Luz da Silva
Keyword(s):  
Tax Avoidance ◽  
Comparative Law ◽  
Tax Planning ◽  
New Approach ◽  
Avoidance Condition ◽  
National Tax ◽  
General Norm ◽  
Tax Appeals ◽  
Corporate Reorganizations ◽  
Business Purpose

With the approval of the general norm of tax avoidance in the national tax laws, there are several judgments of the Administrative Council of Tax Appeals – Conselho Administrativo de Recursos Fiscais (CARF), which have used a tax avoidance institute of comparative law to consider specific practices resulting from companies’ mergers, splits or amalgamation as abusive tax planning. It is known as the “business purpose doctrine”, which has been running the Counselours of the CARF to establish limits on the exercise of business activity, but still little discussed by the Brazilian doctrine. In summary, this new approach seeks to prevent that corporate transactions of this kind are carried out with the purpose of building a diverse legal reality of the factual, under the cover of legal formalism. The legality in corporate reorganizations focusing on the business purpose theory has been subject of compliance with three basic requirements: the temporality of business, the interdependence of the parties and the normality of the operation. In spite of the controversies regarding the legitimacy of the institute, it is noted that adopting a business purpose test seems plausible, once the institute is identified with the cause of the legal business. 

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