scholarly journals Is Incorporation the Solution to the Enigma of Corporate Tax Residency for International Tax Purposes?

2020 ◽  
Vol 7 (4) ◽  
pp. 35-47
Author(s):  
Charles Edward Andrew Lincoln
Keyword(s):  
Tax Evasion ◽  
Tax Avoidance ◽  
The United States ◽  
Vertical Equity ◽  
Corporate Tax ◽  
Economic Reality ◽  
International Tax ◽  
And Control ◽  
Jobs Act ◽  
Central Management

Incorporation of a company for testing residency—if applied uniformly—is likely the best and most accurate way to reflect corporate residency for tax purposes. However, it does not always reflect economic reality. There is not a consensus on what the best approach is. The Organization for Economic Cooperation and Development (“OECD”) countries overwhelmingly use three tests for residency: incorporation, central management and control, and domicile. Indeed, a court in the United States or other jurisdictions may often ask if tax-avoidance motives exist when incorporation occurs in one jurisdiction and central management and control occurs in another. This Article follows the 2017 Tax Cuts and Jobs Act on many international tax provisions that caused a shift in thinking at both the U.S. level, and at the international level in terms of deciding what formulations would be the best way to ensure proper taxation while promoting horizontal and vertical equity. The genesis of this Article is a response and critique of an article on the same subject by the same author: Charles Edward Andrew Lincoln IV, Is Incorporation Really Better Than Central Management and Control for Testing Corporate Residency? An Answer to Corporate Tax Evasion and Inversion, 43 Ohio N.U. L. Rev. 359 (2017). The author now critiques the point of that article and comes to a different conclusion based on different criteria: specifically, new case law, Musgrave’s economic theory of accretion of wealth, and the importance of substance-over-form doctrines.

Are corruption and corporate tax avoidance in the United States related?

2021 ◽  
Author(s):  
Ahmed Al-Hadi ◽  
Grantley Taylor ◽  
Grant Richardson
Keyword(s):  
United States ◽  
Tax Avoidance ◽  
The United States ◽  
Corporate Tax

scholarly journals A Positive Dialectic: Beps and The United States

AJIL Unbound ◽  
2020 ◽  
Vol 114 ◽  
pp. 255-259
Author(s):  
Reuven S. Avi-Yonah
Keyword(s):  
United States ◽  
The United States ◽  
General View ◽  
Profit Shifting ◽  
Current State ◽  
Constructive Dialogue ◽  
International Tax ◽  
State Of Affairs ◽  
International Tax Policy ◽  
Jobs Act

This essay addresses the interaction between the changes in the international tax regime identified by Mason and U.S. international tax policy. Specifically, I will argue that contrary to the general view, the United States actively implemented the Organisation for Economic Co-Operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) recommendations through the Tax Cuts and Jobs Act of 2017 (TCJA). Moreover, the changes of the TCJA influenced the current OECD effort of BEPS 2.0. Thus, the current state of affairs can be characterized as a constructive dialogue: The OECD moves (BEPS 1), the United States responds (TCJA), the OECD moves again (BEPS 2). If the international tax regime is to survive, it is important that BEPS 2 will succeed, and that the US will then go along and amend the TCJA accordingly. From this kind of positive dialectic, a new international tax regime fit for the twenty-first century may emerge.

Ending the Tax Haven Scandals

2009 ◽  
Vol 9 (3) ◽  
pp. 1850175 ◽  
Author(s):  
Robert T. Kudrle
Keyword(s):  
Tax Evasion ◽  
Income Tax ◽  
Tax Avoidance ◽  
Personal Income Tax ◽  
Corporate Tax ◽  
Formula Apportionment ◽  
Automatic Information ◽  
Tax Haven ◽  
The World ◽  
Taking Action

States around the world appear more determined than ever to end tax haven abuse. The new U.S. administration, for example, is taking action against both major tax haven problems: corporation income tax avoidance and personal income tax evasion. Some progress may be made. This essay argues, however, that only radically new policy will likely suffice either to shore up corporate tax revenues or to sharply diminish evasion. Global formula apportionment is needed if the corporate income tax is to be preserved, and only a combination of automatic information sharing among governments and source withholding can stamp out evasion. As in most areas of international economic policy, U.S. leadership is essential.

scholarly journals The Effect of Public Share Ownership on Tax Evasion: Study on Companies Listed in Indonesia Stock Exchange Between 2008-2011

2019 ◽  
Vol 10 (6) ◽  
pp. 124
Author(s):  
Muhammad Ikbal Abdullah ◽  
Andi Chairil Furqan ◽  
Ni Made Suwitri Parwati ◽  
Asmanurhidayani Asmanurhidayani
Keyword(s):  
Tax Evasion ◽  
Management Practices ◽  
Tax Avoidance ◽  
Public Ownership ◽  
Corporate Tax ◽  
Public Companies ◽  
Share Ownership ◽  
The Government ◽  
The Impact ◽  
Public Share

Increasing the concentration of ownership and control of public companies in Indonesia is more likely to increase the likelihood of earnings management practices through tax avoidance. The high percentage of concentrated ownership has encouraged the government and capital market regulators to more broadly promote regulations related to tax incentives and public ownership in order to encourage more transparent practices. This study aims to analyze the policy of public ownership of tax avoidance conducted by Indonesian public companies, specifically after the regulation of Government Regulation No. 81 of 2007 concerning Reduction of Income Tax Rates for Domestic Corporate Taxpayers in the Form of Public Companies, and Minister of Financial Regulation No. 238 / PMK.03 / 2008 concerning Procedures for Implementing and Supervision of Granting Tariff Reductions for Domestic Corporate Taxpayers in the Form of Public Companies. More specifically, this study aims to analyze the impact of public share ownership on tax avoidance by Indonesian public companies. The samples of 320 observations that conducted (firm-years) during 2008-2011. The software that will be used in data analysis is STATA 12. The results showed that the increase in public ownership have a significant effect in improve the practice of corporate tax avoidance, which it is also evidenced by the significant differences in the corporate tax avoidance practices before than after the enactment of these regulations. The findings show that the greater the proportion of public share ownership would result the decreasing number of ETR or ETRC which can be indicated that the greater the practice of corporate tax avoidance. Furthermore, the ROA variable has a negative and significant effect on corporate tax avoidance practices, meaning that the greater the profitability ratio of a company can cause the reported and paid tax burden to decrease.

Countering Harmful Tax Practices

2020 ◽  
pp. 49-65
Author(s):  
Lukas Hakelberg
Keyword(s):  
Tax Evasion ◽  
Financial Stability ◽  
Tax Avoidance ◽  
Clinton Administration ◽  
The United States ◽  
Business Associations ◽  
Perceived Fairness ◽  
Tax Havens ◽  
The Us ◽  
The Impact

This chapter shows that the Clinton administration promoted an international campaign against underregulated financial centers. It did so because it was concerned about the impact of tax havens on the perceived fairness of the US tax system, international financial stability, and the US sanctions regime. The Organisation for Economic Co-operation and Development (OECD), however, made the strategic mistake to tackle tax evasion by individuals and tax avoidance by multinationals in a single project, creating opposition from business associations in the United States and elsewhere. Instead of credibly linking noncompliance with OECD recommendations to economic sanctions, the Clinton administration thus accepted the severe dilution of the harmful tax competition initiative's anti-avoidance elements even before the Bush administration took office in 2001. A nested comparison of two unilateral tax initiatives moreover reveals that the Clinton administration generally failed to pass regulations curbing tax avoidance but succeeded in passing regulations against tax evasion.

Power in International Tax Politics

2020 ◽  
pp. 25-48
Author(s):  
Lukas Hakelberg
Keyword(s):  
Tax Evasion ◽  
Tax Policy ◽  
Domestic Politics ◽  
Good Governance ◽  
The United States ◽  
The European Union ◽  
Administrative Authority ◽  
The Us ◽  
Regulatory Capacity ◽  
International Tax

This chapter develops a theory of power in international tax politics. This theory identifies market size and regulatory capacity as the decisive resources enabling governments to issue credible threats and inducements with a view toward making other governments do what they would not otherwise do. A lack of regulatory capacity explains why the European Union has not wielded the same power in negotiations over global tax policy as the United States despite the EU's similarly sized internal market. In fact, taxation remains an exclusive member state competence. Therefore, the European Commission has no administrative authority to impose penalties on third states or foreign firms not complying with tax good governance standards applicable within the union. At the same time, the principle of nondiscrimination enshrined in EU law prevents individual EU countries from passing sanctions against other member states abetting tax evasion and avoidance. Because of the lack of regulatory centralization in the EU, the US can act as a hegemon in international tax politics. Accordingly, US preferences determined by domestic politics decisively shape the content of global tax policy. The preferences of other governments merely affect the US administration's enforcement strategy.

Change and Stability in Global Tax Policy

2020 ◽  
pp. 1-24
Author(s):  
Lukas Hakelberg
Keyword(s):  
United States ◽  
Tax Evasion ◽  
Tax Policy ◽  
Market Access ◽  
The United States ◽  
Great Power ◽  
Fundamental Change ◽  
Tax Havens ◽  
International Tax ◽  
International Tax Policy

This chapter takes a look at the ability of a great power like the United States to unilaterally effect fundamental change in international tax policy through coercion. It first shows that the structural constraints precluding a common interest in countermeasures to tax evasion were still in place when the US Congress passed the Foreign Account Tax Compliance Act (FATCA). Second, the chapter reveals that there was no need for normative change, because regulative norms have never consistently prevented the United States from interfering with the legal systems of tax havens. From there, the chapter considers when a great power like the United States can effect fundamental change in international tax policy and the domestic tax policies of less powerful countries through coercion. It argues that a government reaches great power status if it controls an internal market large enough to reduce its dependence on international trade and investment relative to the government's negotiating partners and uses its regulatory capacity to effectively restrict market access for foreign firms or investors.

scholarly journals Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

2021 ◽  
Vol 12 (1) ◽  
pp. 4-4
Author(s):  
Nirmala Devi Mohanadas ◽  
Abdullah Sallehhuddin Abdullah Salim ◽  
Suganthi Ramasamy
Keyword(s):  
Empirical Studies ◽  
Tax Avoidance ◽  
Listed Companies ◽  
Developed Countries ◽  
The United States ◽  
Corporate Tax ◽  
Single Measure ◽  
Corporate Strategies ◽  
Tax Returns ◽  
Avoidance Level

While the topic of corporate tax avoidance has been experiencing ceaseless attention among researchers, its empirical aspect is still facing the challenge of constructing a single universally accepted measure of such practice. Due to the confidential nature of tax returns, most empirical studies have had to rely on financial statements information to developed proxy measures such as effective tax rates (ETRs) and book-tax differences (BTDs) (Hanlon & Heitzman, 2010). Nevertheless, these proxies possess their individual advantages as well as limitations. Such available choices may therefore cause confusions to the researchers in choosing the most suitable measure for their corporate tax avoidance studies. As the mainstream studies on corporate tax avoidance have focused mostly on developed economies like the United States, United Kingdom, and Australia, there is a scarcity of such studies in developing countries (Salihu et al., 2015). The unique jurisdictional nature of tax laws and enforcement systems hinder the extant findings' applicability on less economically-developed countries, especially those highly dependent on their corporate income tax revenue which is especial true with regard to Malaysia (Mohanadas et al., 2020). Though not as abundant in numbers, extant published studies had found that Malaysian public listed companies were indeed being consistently tax-avoidant since the 1990s. Nevertheless, these studies had respectively employed only a single measure of corporate tax avoidance. Indeed, nearly all had used variations of ETR while only a few had applied BTD measures. Their mutually exclusive application of ETR and BTD measures could negatively impact their findings' ability to capture tax-deferring corporate strategies (Hanlon & Heitzman, 2010; Lennox et al., 2013). It thus worsened the risk of potential distortion in the results of tax avoidance level which would led to flawed conclusions being made. In view of the above, this study seeks to measure corporate tax avoidance level of Malaysian public listed companies for the years 2015 until 2019 using both ETR and BTD measures. Furthermore, this study aims to analyse how closely these two measure are related in their respective appraisals of the companies' tax avoidance level. Keywords: Corporate Tax Avoidance; GAAP ETR; Cash ETR; Total BTD; Permanent BTD.

scholarly journals Combating Fiscal Fraud and Empowering Regulators

2021 ◽  
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Business Models ◽  
Rapid Change ◽  
Tax Avoidance ◽  
Profit Shifting ◽  
Tax System ◽  
New Business ◽  
International Tax ◽  
The Impact

This book showcases a multidisciplinary set of work on the impact of regulatory innovation on the scale and nature of tax evasion, tax avoidance, and money laundering. We consider the international tax environment an ecosystem undergoing a period of rapid change as shocks such as the financial crisis, new business forms, scandals and novel regulatory instruments impact upon it. This ecosystem evolves as jurisdictions, taxpayers, and experts react. Our analysis focuses mainly on Europe and five new regulations: Automatic Exchange of Information, which requires that accounts held by foreigners are reported to authorities in the account holder’s country of residence; the OECD’s Base Erosion and Profit Shifting initiative and Country by Country Reporting, which attempt to reduce the opportunity spaces in which corporations can limit tax payments and utilize low or no tax jurisdictions; the Legal Entity Identifier which provides a 20-digit identification code for all individual, corporate or government entities conducting financial transactions; and the Fourth and Fifth Anti-Money Laundering Directives, that criminalize tax crimes and prescribe that the Ultimate Beneficial Owner of a company is registered. Working from accounting, economic, political science, and legal perspectives, the analysis in this book provides an assessment of the reforms and policy recommendations that will reinforce the international tax system. The collection also flags the dangers posed by emerging tax loopholes provided by new business models and in the form of freeports and golden passports. Our central message is that inequality can and has to be reduced substantially, and we can achieve this through an improved international tax system.

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