Submission to House Ways & Means Committee in Connection with June 13, 2013 Hearing on Tax Reform: Tax Havens, Base Erosion and Profit-Shifting

2013 ◽  
Author(s):  
Jeffery M. Kadet
Keyword(s):  
Tax Reform ◽  
Profit Shifting ◽  
Tax Havens

Fiscally Responsible Businesses as a Result of COVID-19 Pandemic Shock

2022 ◽  
pp. 161-192
Author(s):  
Cristina Raluca Gh. Popescu ◽  
Jarmila Duháček Šebestová
Keyword(s):  
Tax Evasion ◽  
Tax Reform ◽  
Global Level ◽  
Corporate Tax ◽  
Profit Shifting ◽  
Tax Havens ◽  
Tax Systems ◽  
And Behaviors ◽  
Financial Transactions ◽  
Global Initiatives

The COVID-19 pandemic and COVID-19 crisis represent impressive motivating forces for advancement, change, evolution, and improvement at a global level. The study focuses on the OECD latest developments in international tax reform work on base erosion and profit shifting (BEPS) in the courageous attempt to promote novel global initiatives for responsible tax and to support ambitious global actions for responsible tax principles. The results show the need to establish fiscally responsible businesses as a result of COVID-19 pandemic shock, thus taking back control of countries' tax systems by putting an end to corporate tax evasion and tax havens. The findings address the importance of being in line with tax principles, encouraging responsible financial transactions and behaviors.

scholarly journals Review Reformasi Sistem Perpajakan di Norwegia: Suatu Pembelajaran bagi Reformasi Perpajakan Indonesia

2020 ◽  
Vol 4 (1) ◽  
pp. 1-13
Author(s):  
Maria R.U.D. Tambunan
Keyword(s):  
Big Data ◽  
Welfare State ◽  
Critical Review ◽  
Tax Policy ◽  
Tax Reform ◽  
Tax Compliance ◽  
Profit Shifting ◽  
Productivity Improvement ◽  
The Government ◽  
Taxation System

ABSTRACTThis article is a critical review and as a means of lesson learned for Indonesia taxation system based on the taxation reform undertaken by Norwegian government as a member of welfare state and OECD, that is considered as a country with high tax ratio. It is also a state which has succeed to realize welfare and income distribution without distort domestic economic stabilization. In this article, it is discussed how the Norwegian government fully aware of the role of tax reform as a mandatory task to reach the state objective by optimizing taxation as instrument of social welfare, productivity improvement and stimulus to realize friendly investment environment. Several tax reform agendas such as reduction of corporate income tax, prevention on profit shifting and until the optimization of the use of big data to support the tax reform. Indonesia on its tax reform agenda which has been commenced in 1983 has transformed significantly for many aspects such as administrative affairs and the way the government to implement the tax policy. These measures have aligned with global tax trend. However, several works remain such less optimize tax ratio during the last one decade.Keywords: tax reform, taxation system, tax administration, tax compliance, tax policy ABSTRAKArtikel ini merupakan critical review sekaligus sebagai sarana pembelajaran bagi sistem perpajakan di Indonesia atas reformasi sistem perpajakan yang dilakukan oleh pemerintah Norwegia sebagai salah satu dari kelompok negara welfare state yang oleh OECD dinilai berhasil memiliki tax ratio yang cukup tinggi sekaligus mampu menciptakan pemerataan penghasilan tanpa mendistorsi kegiatan ekonomi domestik.  Dalam artikel ini diuraikan bagaimana pemerintah Norwegia memahami sepenuhnya bahwa reformasi pajak merupakan suatu keniscayaan untuk mencapai tujuan negara yaitu menggunakan instrumen pajak sebagai instrumen pemerataan sosial, peningkatan produktivitas dan stimulus untuk mewujudkan lingkungan ekonomi yang ramah terhadap investasi. Beberapa agenda reformasi yang diulas seperti kebijakan penurunan tarif pajak penghasilan korporasi, pencegahan terjadinya profit shifting hingga pengoptimalan penggunaan teknologi dan big data dalam sistem perpajakan. Indonesia dalam perjalanan reformasi perpajakan sejak 1983 telah mengalami perubahan yang cukup signifikan baik dalam hal administrasi dan implementasi kebijakan pajak sesuai dengan tren reformasi perpajakan global. Namun, catatan penting dalam perjalanan reformasi perpajakan Indonesia adalah masih rendahnya tingkat kepatuhan dan masih rendahnya tax ratio Indonesia dalam kurun waktu satu decade terakhirKata kunci: reformasi perpajakan, sistem perpajakan, administrasi perpajakan, kepatuhan, kebijakan pajak.

Tax Abuse and Implications for Human Rights in Africa

2019 ◽  
pp. 189-208
Author(s):  
Annet Wanyana Oguttu ◽  
Monica Iyer
Keyword(s):  
Human Rights ◽  
Multinational Enterprises ◽  
Tax Reform ◽  
Tax Avoidance ◽  
International Taxation ◽  
Fair Share ◽  
Profit Shifting ◽  
African Countries ◽  
Tax System ◽  
Development Goals

This chapter analyzes whether the international tax reform measures instituted under the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Project are effective in ensuring African countries get a fair share of taxes from multinational enterprises (MNEs) transacting within their borders, so that they can finance their development goals and promote the human rights of their citizens. The OECD chose to focus on curtailing sophisticated tax-avoidance schemes by strengthening existing anti-avoidance provisions. MNEs have abused these existing laws, however, making them largely ineffective. Given that MNEs are always a step ahead in devising new tax-avoidance strategies, one wonders whether emphasis on strengthening anti-avoidance laws will achieve much. The OECD seems to have missed an opportunity to evaluate the whole tax system and deal with the very root of the problems inherent in international taxation.

scholarly journals PROFIT SHIFTING TO EUROPEAN TAX HAVENS: THE CASE OF SUBSIDIARIES OF MULTINATIONAL COMPANIES IN SERBIA

TEME ◽  
2021 ◽  
pp. 1441
Author(s):  
Stefan Vržina
Keyword(s):  
Statistical Tests ◽  
Multinational Companies ◽  
Tax Burden ◽  
Public Disclosure ◽  
Tax Rates ◽  
Profit Shifting ◽  
Tax Havens ◽  
Significant Difference ◽  
Tax Haven ◽  
National Tax

Due to the presence in a number of countries, multinational companies (MNCs) are in position to register a considerable part of pre-tax profit in countries with a preferential tax regime in order to avoid paying taxes at high rates. In other words, MNCs are able to shift profit from countries with a high tax burden to countries with low tax burden. In this paper, it is examined whether Serbian subsidiaries of MNCs, directly owned by European tax haven entities, more intensively shift profit to tax havens relative to other subsidiaries. A list of tax havens published by Oxfam in 2016 is used. Statistical tests and regression analysis showed that there is no significant difference in profit shifting to tax havens between two mentioned groups of subsidiaries. Therefore, it is possible that MNCs consider Serbia as a country with preferential tax regime due to relatively low statutory and effective corporate income tax rates. However, for the purposes of a detailed analysis, national tax authorities should insist on public disclosure of company tax reports to make tax practices of MNCs more transparent.

scholarly journals Diverse Interests and International Legitimation: Public Choice Theory and the Politics of International Tax

AJIL Unbound ◽  
2020 ◽  
Vol 114 ◽  
pp. 265-269
Author(s):  
Lilian V. Faulhaber
Keyword(s):  
Political Parties ◽  
Public Choice ◽  
Tax Reform ◽  
Choice Theory ◽  
Public Choice Theory ◽  
Profit Shifting ◽  
National Interests ◽  
The World ◽  
International Tax

In her article, Mason concludes that politics – or “bargaining over national interests”— “will play a starring role in determining the outcomes” of the current digital tax project. In this essay, I apply public choice theory to the politics of international tax and argue that two questions can shape our understanding of international tax negotiations and therefore help us predict the outcomes of future international tax reform projects. First, what interests are country delegates representing? Second, how are countries using their involvement in international negotiations to represent these interests? The first question highlights that country delegates are often not defending some agreed-upon “national interest” but are instead often protecting the interests of particular political parties, industries, or taxpayers, which in turn means that interests can change over time and that some voices are missing from debates. The second question highlights that country delegates can engage in international tax negotiations in a variety of ways. They can try to limit what, if anything, the negotiations achieve; they can try to push for more expansive results; and they can use the negotiations to provide international support for their own country's laws. This essay focuses on one particular version of this third type of engagement, where delegates use their country's involvement in an international project to validate and legitimate an idea or proposal that may previously have had little support. I refer to this involvement as “international legitimation,” and I argue that the Organisation for Economic Co-operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) Project shows that delegates who took this approach may have achieved the most long-term success in that their inclusion of little-known provisions or concepts in the international outputs of the BEPS Project ended up leading to these provisions and concepts being adopted by countries around the world.

scholarly journals A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity

2019 ◽  
Vol 11 (10) ◽  
pp. 2803
Author(s):  
Samer Khouri ◽  
Lubos Elexa ◽  
Michal Istok ◽  
Andrea Rosova
Keyword(s):  
Income Tax ◽  
Financial Statements ◽  
Tax Planning ◽  
Corporate Income Tax ◽  
Profit Shifting ◽  
Tax Havens ◽  
Tax Haven ◽  
Before And After ◽  
The Status ◽  
The One

The main aim of this paper is to provide empirical evidence about profit-shifting to selected tax havens by Slovak companies. This contribution focused on the very rare evidence of use of tax havens by Slovak companies not only in the field of corporate income tax, but also in selected areas of profitability. Two sources of data were used. Lists of Slovak companies with tax haven links were provided by the company, Bisnode, and financial statements of investigated companies were gained from the Finstat database. Based on the available data, the investigated period was between 2008 and 2016. We statistically tested selected indicators (ETR, taxes per assets, ROE, ROA, and ROS) of Slovak companies with direct ownership links to tax havens compared to their counterparts. Our findings suggest that Slovak companies with an ownership link to tax havens pay significantly lower taxes compared to companies without ownership links to tax havens during the period monitored. The aggressive tax planning was not only confirmed by the significantly lower reported values of ETR and taxes per assets, but also by the lower values of ROA. On the one side, Slovak companies with ownership links to midshore tax havens had the highest values of ROE, ROA, and ROS, but on the other side, these Slovak companies reported the highest ETR among the appointed categories (onshore, midshore, and offshore). The lowest taxes paid per unit of total assets were found in Slovak companies with ownership links to onshore tax havens. The analysis was supplemented by the changes of the selected indicators before and after obtaining an ownership link to a tax haven.

scholarly journals Sustainability Assessment: Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital?

2020 ◽  
Vol 12 (23) ◽  
pp. 10004
Author(s):  
Cristina Raluca Gh. Popescu
Keyword(s):  
Intellectual Capital ◽  
Sustainability Assessment ◽  
Intangible Assets ◽  
Assessment Tools ◽  
Profit Shifting ◽  
Tax Havens ◽  
Decision Supporting ◽  
The One ◽  
Corporate Social ◽  
Assessment Procedures

Nowadays, sustainability assessment procedures, sustainability assessment indicators, and sustainability assessment models are regarded by specialists as powerful decision-supporting tools able to foster sustainable development worldwide by addressing the main economic, financial, social, and environmental challenges. In like manner, the role and relevance of intangible assets have managed to produce an irreversible change in today’s world which also seriously affected the general traits of our economic systems, leading to a phenomenon known by specialists as the “revolution of intangibles”. Over the last decades, the controversies regarding the recognition and measurement of intellectual capital (IC) have led, on the one hand, to the development of possible solutions and systems for calculating and disclosing the performance generated or stimulated by various components of IC, but, on the other hand, they have also been the main premise that favored the use of intangible assets, in general, and intellectual property (IP), in particular, the transfer of results and the reduction of the tax base by transferring income to tax havens or jurisdictions that do not tax these categories of assets. Against these aggressive methods of fiscal planning, the countries reacted unitarily and coordinated through the BEPS (Base Erosion and Profit Shifting Project) plan. Based on the country’s profile as well as on the results of the annual evaluations published by the OECD (Organisation for Economic Co-operation and Development), our study verifies whether there are premises for IP use for income transfer into favorable jurisdictions and whether the measures and solutions proposed by Action 5 of the BEPS end disputes over the recognition and evaluation of IC. In addition, our work presents a novel methodological framework for sustainability assessment, which focuses on establishing important connections between the recognition and measurement of intellectual capital, the role of sustainability assessment tools, and the implications of corporate social responsibility, since, these days, the real “values” associated with a country or business profile may be found in the intangible assets they possess.

scholarly journals Illicit financial flows and the Global South: A review of methods and evidence

2020 ◽  
Author(s):  
Kasper Brandt
Keyword(s):  
Multinational Enterprises ◽  
The United States ◽  
Global South ◽  
Financial Assets ◽  
Profit Shifting ◽  
Tax Havens ◽  
Financial Flows ◽  
Illicit Flows ◽  
Illicit Financial Flows ◽  
Domestic Resource

Illicit financial flows (IFFs) constitute a major challenge for development in the Global South, as domestic resource mobilization is imperative for providing crucial public services. While several methods offer to measure the extent of IFFs, each has its benefits and drawbacks. Critically, methods based on the balance of payments identity may capture licit as well as illicit flows, and a method based on macroeconomic trade discrepancies suffers from doubtful assumptions. The most convincing estimate to date demonstrates that individuals hold financial assets worth around ten per cent of global GDP in tax havens. Evidence further indicates that countries in the Global South are more exposed to individuals and multinational enterprises illicitly transferring money out of the country. Further research is warranted on profit shifting out of countries in the Global South and the effectiveness of anti-IFF policies in countries outside Europe and the United States.

scholarly journals Profit shifting in Brazil and the impact of tax havens

2021 ◽  
Vol 32 (85) ◽  
pp. 95-108
Author(s):  
Alex A. T. Rathke
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Profit Maximization ◽  
Profit Shifting ◽  
Tax Havens ◽  
Tax Rate ◽  
Pricing Rules ◽  
Robust Least Squares ◽  
High Level ◽  
The Impact

ABSTRACT We investigate tax-induced profit shifting in Brazil and the impact of tax havens on the shifting behavior of firms. Profit shifting research in Brazil is virtually non-existent, although the shifting incentives in Brazil are prominent. Our research fills this gap with evidences in the novel Brazilian context. Profit shifting is a tax-minimization strategy where multinational enterprises perform intra-firm transactions to allocate taxable profits to low-tax locations. Brazil combines a remarking set of profit shifting incentives, especially a high corporate tax rate, extremely complex tax system, and distinguished transfer pricing rules. Further researches may leverage from the shifting incentives in Brazil, since it provides opportunities to investigate additional factors that affect the shifting behavior of firms. We analyze 989 transaction-by-country observations for the period of 2010-2017. Baseline analysis follows the robust least squares approach with controlling covariates. Linear estimate model derives from the conventional Cobb-Douglas production function, to analyze the impact of shifting incentives on profit maximization. We find that Brazilian firms have a high level of intra-firm transactions with related parties located in low-tax countries, especially with tax havens. It represents a strong evidence of profit shifting behavior in Brazilian firms.

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