...APPLE TAX AVOIDANCE SCHEME DOUBLE NON-TAXATION April 2015 1 Apple International Structure Source: New York Times 2 Taxation Principles RESIDENCE: • Incorporation • Place of Management -> Case of Ireland SOURCE: • Source jurisdiction is generally expected to have priority, but the concept of source is generally poorly developed in domestic tax legislation • Notion of permanent establishment, head office and transfer pricing rules 3 Double Irish Arrangement • The Double Irish Arrangement is a tax avoidance strategy that some multinational corporations use to shift income from a higher-tax country to a lower-tax country. • It is called Double Irish because it requires two Irish companies to complete the structure. One of these companies is tax resident in a tax haven 4 Apple Operations International (AOI) • AOI, the company's primary offshore holding company, made up 30% of Apple's total world profits. • Residence: Irish and U.S. tax residency rules: • Ireland uses a management and control test to determine tax residency. • United States determines tax residency based upon the entity’s place of formation. • AOI is incorporated in Ireland, it is not tax resident in Ireland, because AOI is neither managed nor controlled in Ireland. Because AOI was not incorporated in the United States, AOI is not a U.S. tax resident under U.S. tax law either. 5 Apple Sales International (ASI) (1) • The second...
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...growth of any city, most government officials do not keep the idea of adult entertainment type businesses at the top of their list or in the front of their minds; however almost any and every city of any size will have to encounter this type of business at some point in time. Adult entertainment type businesses come with their own type of issues when it comes to tax laws, business permits, and so forth, but in the past these types of businesses have been able to utilize their First Amendment Rights to defend their style of business, but when these types of businesses are utilizing local tax money to protect and defend their businesses when is enough, enough? It is well known that many people will turn to adult entertainment, not only for entertainment but for work for the simple fact of making a significant amount of money in a very short time; however what kind of impact do these types of businesses have on local governments and societies when the majority of the employees do not pay any taxes on their income? The following paper will describe the effects that adult entertainment businesses have on local governments, the tax laws, and the effects these taxes have on the society of the environment the business is in. Throughout history there have been many different types of entertainment for the masses. In recent years the idea of adult entertainment has shifted form to a style that is all in its own. With this new style of entertainment has come a high amount of changes that...
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...Tax Evasion In fact, for Amazon the transfers of profits, tax avoidance or even tax evasion are common practices in their multinational operations. The bigger the company is, the more overseas set point, it will use more ways to tax evasion. For exemple, for the companies, R & D base and branch offices are throughout the world and that help them to implement easily tax evasion. On the other hand, some countries and regions also specifically set up some duty-free zone, introduced a number of policies to attract multinational companies to settle, in order to create jobs and increase revenue. An other point is corporate tax rate: in UK it’s reaching 24% and it’s even more in France (more than 33%); this is also a reason for Amazon to do tax evasion. In the wake of the financial crisis, the governments are more concerned about the phenomenon of tax evasion, hoping to block the loopholes. For exemple, the PIC of British parliamentary public accounts committee, Ms. Hodge pointed out that the citizen complain that tax evasion is unfair, especially under the current economic situation. We can understand that tax issue with Amazon make them save a lot of money but in the same time it’s creat a bad reputation with some customer who are asked to pay more and more tax every years. Financial circles also have views on this phenomenon. They think current system has been unable to act as a restraint on the company for the tax issue, and it almost became a voluntary tax. They suggest...
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...Party. This led many people, including myself, to wonder what would Britain look like if Jeremy Corbyn became Prime minister. I, as a conservative believe that if this did happen Britain would descend into Chaos. However, as I look more into his ideas I question is this in fact the case. Jeremy Corbyn wants to end Austerity. He believes that it makes the weakest people in Britain’s society weaker. To achieve this he would introduce higher taxes for the rich (from the 45p rate to possibly 70 P ). He would also crack down on tax avoidance and tax evasion from big companies like Starbucks and Amazon. He has also expressed a desire for a maximum wage, however, I do think that this is a really bad idea as it would fewer companies would wish to set up in the UK which would mean fewer job opportunities and fewer taxes paid by these companies and rich individuals. If the richest earners in the country pay over 80% of the tax, why introduce a maximum wage reducing tax income. This is truly a stupid idea. Jeremy Corbyn would try and leave NATO and abandon Trident. He wishes to severely cut the arm forces to only 100,000 men. Yes, this would save over 150 billion pounds most likely more) however it leaves Britain vulnerable to 1. Attack 2. Intimidation from other countries 3. Loosing its international importance Jeremy would argue that with these savings he could make Britain have the best health care and education in the world. He also will argue that...
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...successful I.T. Company Apple has caught a national wide focus. This time is not because they held a conference for new iphone or any i-products, but because their tax planning. As a model company, Apple always create amazing products, we can see their products all around the world, so many newspapers and magazines praise their design teams and marketing teams. These time their Tax team was enjoying the annoyance, after the news related Apple’s tax strategy open to the public there were a lot of argument around them. Some people thought they break the Tax laws, some people believe the Apple was clean, and some people thought Apple’s approach is immorality. In this paper, I will explain the approach which Apple use to avoid tax, show some supporting codifications and regulations about this approach, and analysis whether this approach is lawful. At last, I will show my view point about this issue. 1. Explain the approach which Apple use to avoid tax. 1) Basic knowledge Apple is one of the largest international company in the U.S., they create billions of profit a year and become the most successful I.T. Company in the world. Apple sell their products all over the world, at same time, they also have some subsidiary companies overseas to help them avoiding tax. The approach for Apple Inc. to avoiding the huge tax is very complex, and need several special requirements. The main profits Apple earned are from two parts: tangible assets sells such as Iphone, Ipad, and Imac, and...
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...KPMG's Tax Shelters Tax shelter is a legal way to reduce taxable income, which in turn reduces taxes. By utilizing legal tax shelters, it is possible to avoid taxes without evading them illegally and suffering consequences. However, in the case presented by Tanina Rostain. KPMG has used tax shelters as a form of tax evasion rather than tax avoidance. My goal in this paper is to discuss how the concept of Groupthink and Rationalization played a role in the partners decisions, point out when tax avoidance becomes tax evasion, Describe how CPA firms can provide high quality tax consulting for their clients without crossing the line into tax evasion, and Finally analyze why KPMG (as an organization) failed to prevent this scandal from occurring at their firm. First of all, when discussing concepts like "Groupthink" and "Rationalization" I prefer to start with a brief definition. "Groupthink occurs when a group makes faulty decisions because group pressures lead to a deterioration of “mental efficiency, reality testing, and moral judgment”(Irving). While " Rationalization is a defense mechanism that involves explaining an unacceptable behavior or feeling in a rational or logical manner, avoiding the true reasons for the behavior"(Cherry). As we can see from these definitions, the tax partners in KPMG showed popular symptoms' of groupthink which are: * "Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks. * Collective rationalization...
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...paper seeks to glean an understanding of corporate tax shelters, in respect to legal and ethical considerations. Tax shelters are often viewed with negative connotations, yet the general public holds different perceptions of the various classifications of tax shelters, tax avoidance, tax evasion, and tax flight (Kirchler, Maciejovsky, & Schneider, 2003). While this suggests a tolerance based on legal concerns, there exists a growing accountability for corporate social responsibility, “whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, and others stakeholders, as well as their environment” (Guliani, 2014, p. 1117). Part of this includes, “companies paying their due taxes and obeying the law” (Guliani, 2014, p. 1120). In order to analyze the ethicality of tax shelters, this paper will introduce a variety of corporate tax shelters, discuss corporate tax shelters in relation to tax avoidance and tax evasion, explore the impact of corporate tax shelters on stakeholders, and examine the affect corporate social responsibility has on tax liability. A Legal and Ethical Examination of Corporate Tax Shelters As each business embarks on a pursuit for profit, companies often find opportunities to reduce tax liabilities in the form of corporate tax shelters. Corporations should be aware that when reducing tax liability, they must consider the legality and the...
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...CIPD ASSIGNMENT SUBMISSION DECLARATION To be completed by candidate: |Centre name: |ACACIA LEARNING | | |Candidate name: |Suzanne Averis | | |CIPD Qualification undertaken: | |CIPD Membership No: |44402910 |Unit code(s): |3HRC (HR) | |Unit title(s): |Understanding Organisations and the Role of Human Resources | |Unit tutor: |Janine Waldman | |Date due for assessment: |2/9/15 |Date submitted: |11/8/15 | |Word Count: | | |State number of word used |2194 | |Candidate declaration: ...
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...THE HONG KONG POLYTECHNIC UNIVERSITY AF5206 HONG KONG TAX FRAMEWORK Unit 14 – Anti-avoidance Provisions Coverage 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Tax avoidance and Tax evasion Principles of anti-avoidance rules Anti-avoidance provisions in IRO Section 61 Section 61A Doctrine of fiscal nullity Section 20 Section 61B Section 39E Section 9A (Type I service company arrangement) Type II service company arrangement Advance Ruling Tax planning and ethical issues Basic tax planning principles Basic techniques of tax planning 1 TAX AVOIDANCE AND TAX EVASION Tax avoidance - Attempt to obtain tax benefit (i.e. reduction, elimination or postponement of tax) by legal means Tax evasion - Failure on the part of taxpayer to supply full and correct information relevant to an assessment of tax because of deliberate attempt or negligence - An offence punishable by a fine and/or imprisonment 2 PRINCIPLES OF ANTI-AVOIDANCE RULES Westminster principle - “Every man is entitled if he can, to order his affairs so that tax attaching under the appropriate Act is less than it would otherwise be.” [Lord Tomlin in IRC v. Duke of Westminster (1935)] Choice principle - Established in Australian case law 2014 MPA_U14 Anti-avoidance.doc 1 August 2014 - Taxpayers are free to create favourable situations which will attract tax consequences for which the legislation specifically provides - If the legislature confers a choice on the taxpayer so as to whether or not...
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...The goal of tax planning is to minimize taxes is not a true statement. The goal of tax planning is t maximize the taxpayer's aftertax wealth while simultaneously achieving the taxpayers non-tax goals. 3. Timing strategy exploits the variation in taxation across time. Income shifting strategy exploits the variation in taxation across taxpayers. Conversion strategy exploits the variation in taxation across activities. 7. The factors that the benefits of accelerating deductions are higher tax rat, higher interest rats, larger transaction amounts, and the ability to accelerate deductions by two or more years. The factors the increase the benefits of deferring income are higher tax rates, higher rates, larger transaction amounts, and the ability to defer revenue recognition for longer periods of time. 10. If an investor can earn a positive return, $1 invested today should e worth $1.05 in one year, 17. Paying dividends is not an effective way to shift income from a corporation to is owners because corporations do not get a tax deduction for dividends paid, paying dividends is not an effective way to shift income. Paying dividends results in double taxation. 22. The constructive receipt doctrine limits income deferral for cash-method taxpayer. 24. Related party transactions receive more IRS scrutiny because each transacting party negotiates for his or her own benefits. 25. Business purpose doctrine allows the IRS to challenge and disallow business expenses for...
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...includible in gross income include (but are not limited to) amounts received from radio and television giveaway shows.” Evidence In 2000, the first season of Survivor aired and its winner was rewarded $1 million. Richard Hatch claimed his prize as the winner of that season. However, he failed to claim the earnings on his taxable income for the next 6 years and was convicted of tax evasion. In the case United States v. Richard Hatch, Hatch violated 26 U.S.C. §§ 7201, which states “any person who willfully attempts in any manner to evade or defeat any tax imposed by this title shall be imprisoned…” He also violated 26 U.S.C. §§ 7206, which prevents fraud and false statements. Hatch was sentenced to 51 months in prison, and was still forced to pay his taxes. In another case, Turner v. Commissioner, the defendant won two steamship tickets on a radio quiz show and reported only $520 from the tickets in his gross income. The IRS determined that the tickets should have been reported at the full retail price of $2,200. Thus, causing a deficiency in his taxes. However, under Section 74 in Section 61, the Tax Court had “emphasized objective factors in determining the amount to be included in the taxpayer’s...
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...5. The German tax authorities The „Bundeszentralamt für Steuern“ (The Federal Central Tax Office) is responsible for the tax system in Germany. In order to catch tax evaders the German authorities have ample access privileges. In the case of suspicion of tax evasion they have access to most public databases. Moreover in Germany the bank secrecy in fact doesn’t exist since the banks have to corporate with the tax authorities, if there is any suspicion of tax evasion. Punishment for tax evasion is very strict and hard in Germany. For serious tax evasion the consequence can be high fines and a prison term up to 10 years. The period of limitation for tax fraud amounts also to 10 years. Compared to international regulation Germany is strict regarding tax evasion. Australia and Germany have a double tax agreement which was stated in 1974. Purpose of the agreement is the avoidance of double taxation and tax evasion of individuals and businesses and a general ease in favor for the cross border economic exchange. The agreement says in which country individuals and companies have to pay taxes. Crucial for the tax claim is the habitual residence of the individual or the permanent business establishment of the company. Article 15 of the agreement for example states that a Non-executive director who´s getting paid for his work in Australia, while he is living in Germany, also must pay taxes in Germany. Conclusion: Even if there are many opportunities to avoidance or evasion of taxes...
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...9.9 Tax Investigation Framework What is Tax Investigation Tax investigation is an inspection of taxpayer's business and / or individual books, records and documents. This inspection is to ensure the right amount of reported income and paid taxes required under laws and tax provisions. The investigation will be carried out only in cases where is suspected on the basis of precise and clear evidence that the tax payer is deliberately trying to avoid paying taxes or having committed an act of willful deceit under the Act, such as real property gains Tax Act ITA and 1976, the Petroleum(Income Tax) Act 1967, Promotion of Investment Act 1986, the Stamp Act 1949 and the Labuan Offshore Business Activity Tax Act 1990. There are two categories as follows: 1. Civil Tax Investigation Civil tax investigation activity involves detection of tax evasion. The primary concern being recovery of tax loss and imposition of heavy penalties. 2. Criminal Tax Investigation Functions and work procedures involving criminal tax investigation are similar to that of civil investigation. However with criminal investigation, it more focus on gathering admissible evidence with a view towards prosecution and conviction of the tax evader for commission of offences pursuant to ITA, Penal Code (Act 574), Criminal Procedure Code (Act 593), Evidence Act 1950 (Act 56) and other relevant Acts.(Hasil, 2007). How A Tax Investigation is carried out 1. The Visit Tax investigations conducted by the...
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...FOLLOWING SOURCE): Type report Title Tax evasion and the source of income : an experimental study in Albania and the Netherlands Author(s) K. Gërxhani, A. Schram Faculty UvA: Universiteitsbibliotheek Year 2003 FULL BIBLIOGRAPHIC DETAILS: http://hdl.handle.net/11245/1.427430 Copyright It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content licence (like Creative Commons). UvA-DARE is a service provided by the library of the University of Amsterdam (http://dare.uva.nl) (pagedate: 2014-11-27)TAX EVASION AND THE SOURCE OF INCOME: AN EXPERIMENTAL STUDY IN ALBANIA AND THE NETHERLANDS AIAS Working Paper 03/11 May 2003 Dr. Klarita Gërxhani AMSTERDAM INSTITUTE FOR Prof. Dr. Arthur Schram ADVANCED LABOUR STUDIES Universiteit van Amsterdam © Klarita Gërxhani Amsterdam, May 2003 This paper can be downloaded at www.uva-aias.net/files/aias/WP11.pdf Amsterdam Institute for Advanced Labour Studies Tax Evasion and the Source of Income: An Experimental Study in Albania and the Netherlands 5 Tax Evasion and the Source of Income: An Experimental Study in Albania and the Netherlands∗ Abstract A series of experiments among different social groups in both Albania and the Netherlands give the opportunity to compare behavioral patterns related to tax evasion. Aside from the decision whether...
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...corporations to decide where they want to be located for tax purposes. The residence of corporations is generally determined by the place of incorporation test or “the place of management and control” test. The “place of incorporation” test is subject to taxpayer manipulation because e-commerce can be conducted anywhere, as it is inexpensive to establish a company in a tax haven. Therefore, the test of place of incorporation basically allows taxpayers to decide whether they want to pay tax on the basis of residence or source of income. Under the test of place of central management and control, a corporation is resident in the country in which the board of directors holds its meetings. As a result of technological communication devices such as videoconferencing and other electronic discussion groups that can be conducted over the Internet and related technologies, and the relatively accessible and inexpensive means of transportation available to senior managers and directors, the place of central management and control can be difficult to determine. Given the borderless nature of ecommerce, the death of distance and the lack of a physical presence required for corporations to engage in commercial activities, the ability to incorporate a business in Country A, while half of the directors reside in each of Country B and C, places a limit on the effectiveness of this test. E-commerce makes it easy for corporations to relocate to tax havens. As geographical boundaries become irrelevant...
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