GlaxoSmithKline Plc.: International Transfer Pricing and Taxation

2007 ◽  
Vol 22 (4) ◽  
pp. 749-759
Author(s):  
Mahendra R. Gujarathi
Keyword(s):  
Multinational Corporations ◽  
Intangible Assets ◽  
Transfer Pricing ◽  
Tax Credits ◽  
Internal Revenue Service ◽  
Internal Revenue ◽  
The U.S

This comprehensive case intends to develop your understanding of the complexities involved in the international transfer pricing and taxation of intangible assets. The backdrop for the case is GlaxoSmithKline's $5.2 billion settlement in 2006 with the U.S. Internal Revenue Service. You are required to provide possible rationales for the positions advocated by the Company as well as the IRS. You are also required to present calculations under different transfer pricing methods, identify the most appropriate method, compute Foreign Tax Credits for different scenarios, and suggest possible strategies for multinational corporations to reduce the odds of negative settlements with tax authorities.

scholarly journals Abuses and Penalties of a Corporate Tax Inversion

2019 ◽  
Vol 7 (1) ◽  
pp. 5
Author(s):  
James Yang ◽  
Leonard Lauricella ◽  
Frank Aquilino
Keyword(s):  
Multinational Corporations ◽  
International Taxation ◽  
Internal Revenue Service ◽  
Tax Law ◽  
Corporate Tax ◽  
Tax Base ◽  
Tax Rate ◽  
Tax Savings ◽  
Treasury Department ◽  
The U.S

There is a serious problem in international taxation today. Many United States (U.S.) multinational corporations have moved abroad to take advantage of a lower tax rate in a foreign country. As a consequence, the tax base in the U.S. has been seriously eroded. This practice is known as “corporate tax inversion”. This paper discusses the abuses and penalties of this phenomenon. It is rooted in some deficiencies in the U.S. tax law. This paper points out that the U.S. has the highest corporate tax rate in the world. It imposes tax on worldwide income. It permits deferral of tax on foreign-sourced income until dividends are repatriated back to the U.S. As a result, it creates tax loopholes. This paper reveals six actual cases of corporate tax inversion. This practice has triggered the Congress to enact §7874, the Internal Revenue Service (IRS) to issue Notices IR 2014-52 and IR 2015-79, and the U.S. Treasury Department to promulgate TD 9761. This paper investigates some details of these penalties. This paper further demonstrates an example in determining the amount of tax savings by engaging in a corporate tax inversion. It also offers many strategies.

Microsoft's Foreign Earnings: Tax Strategy

2015 ◽  
Vol 30 (4) ◽  
pp. 297-310 ◽  
Author(s):  
Larissa S. Kyj ◽  
George C. Romeo
Keyword(s):  
Multinational Corporations ◽  
Transfer Pricing ◽  
Corporate Tax ◽  
Tax Havens ◽  
Tax Rate ◽  
Foreign Earnings ◽  
Microsoft Corporation ◽  
A Company ◽  
Foreign Corporation ◽  
The U.S

ABSTRACT The high corporate tax rate and the complexity of the U.S. tax code provide U.S. multinationals with the incentives and opportunities to shift income to foreign low-tax jurisdictions. In theory, U.S. corporations are taxed at the statutory rate of 35 percent on their worldwide income, but income earned by an active Controlled Foreign Corporation (CFC) is usually not taxed until it is repatriated to the parent company in the U.S. As a result, trillions of dollars in cash and investments sit in offshore companies, awaiting a repatriation tax holiday. Much of these earnings are held by technology companies. The case looks at Microsoft Corporation, a company with $60.8 billion in unrepatriated earnings as of 2012. The case considers tax havens, nonrepatriation of earnings, cost-sharing arrangements, and transfer pricing and is intended to expose students to the subtleties and complexities of corporate tax strategies. Although the case is set in 2012, the goal of the case is to demonstrate to the students the complex environment in which multinational corporations operate and is independent of any particular tax regime.

Subsidizing American Corporate Expansion Abroad: Pitfalls in the Analysis of Public and Private Power

1985 ◽  
Vol 37 (2) ◽  
pp. 180-203 ◽  
Author(s):  
Joanne Gowa
Keyword(s):  
Multinational Corporations ◽  
Multinational Firms ◽  
Eisenhower Administration ◽  
Private Capital ◽  
Public And Private ◽  
Internal Revenue ◽  
Private Power ◽  
Corporate Expansion ◽  
Corporate Interests ◽  
The U.S

In the mid-1950s, the Eisenhower administration proposed that the U.S. government subsidize the expansion of American corporate interests abroad. In 1954 and again in 1955, the Republican administration recommended that Congress ease the provisions of the Internal Revenue Code applicable to income earned abroad in order to encourage American multinational corporations (MNCs) to increase their investments overseas. The MNCs and exporters opposed specific components of the administration's tax package, however; Congress therefore refused to endorse it. By the end of its tenure in office, the administration itself retreated from its attempts to subsidize private capital exports and began to advocate a crackdown on tax abuse by American multinational firms.

Running a Tax System

2020 ◽  
Author(s):  
Leonard E. Burman ◽  
Joel Slemrod
Keyword(s):  
Internal Revenue Service ◽  
Tax Administration ◽  
Tax System ◽  
Federal Level ◽  
Internal Revenue ◽  
System P ◽  
The U.S

How much does it cost to run the U.S. tax system? The easy part of answering this question is to add up the budgets of the various tax administration agencies across the country. At the federal level, that would be the Internal Revenue Service, or...

Organizations and Governance

2013 ◽  
Author(s):  
Tom Holland
Keyword(s):  
Social Service ◽  
Service Organizations ◽  
Internal Revenue Service ◽  
Governing Boards ◽  
Social Service Organizations ◽  
Internal Revenue ◽  
Strategic Goals ◽  
The U.S

Most social service organizations are identified by the U.S. Internal Revenue Service as nonprofits, designated as 501c3 organizations. They are overseen by governing boards, which ensure that all the activities of the organization contribute to advancing its mission. These boards also identify strategic goals, hire and guide the executive, oversee the organization's finances, help raise funds for it, and ensure accountability to stakeholders.

scholarly journals Taxation of Virtual World Economies: A Review of the Current Status

2014 ◽  
Vol 7 (1) ◽  
Author(s):  
Jamie S. Switzer ◽  
Ralph V. Switzer
Keyword(s):  
Virtual Worlds ◽  
Virtual World ◽  
Market Value ◽  
Internal Revenue Service ◽  
Current Status ◽  
Government Officials ◽  
Internal Revenue ◽  
Goods And Services ◽  
Fair Market Value ◽  
The U.S

The taxation of virtual world economies is uncharted terrain, one that both researchers and government officials are just beginning to scrutinize. Taxes are inevitable in any economy, but what about the increasingly lucrative virtual world economies? The market for virtual goods and services is estimated to be in the millions of dollars, so it is no wonder that governments are beginning to take notice. Experts are divided as to the feasibility of taxation of virtual economies. Most experts agree however that there is significant ambiguity in the current U.S. Internal Revenue Code with respect to virtual worlds. It is unclear if transactions occurring in a virtual world are taxable in the U.S., and the Internal Revenue Service has to date not offered any strong guidance regarding the issue.In this article, we argue that virtual transactions are already subject to taxation under current U.S. law, at any point in time that the U.S. Internal Revenue Service should decide to enforce the current law, whether taking place in game worlds or unscripted worlds. This would include virtual-to-virtual transactions as well as virtual-to-real transactions, as the issue at hand is whether or not virtual activity is taxable, regardless of realization, because all goods and services have a fair market value.

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