... Abstract Last year the most 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...
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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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...Indian Black Money Abroad In Secret Banks and Tax Havens Second Report Of The Task Force on the steps to be taken by India Members Shri Gurumurthy, Chartered Accountant, Chennai Shri Ajit Doval, former Director Intelligence Bureau, Delhi Prof R.Vaidyanathan, Professor of Finance Indian Institute of Management, Bangalore Shri Mahesh Jethmalani, Senior Advocate, Mumbai Submitted to BHARATIYA JANATA PARTY 1 I. The First Interim Report The first Interim Report of the Task Force appointed by the Bharatiya Janata Party was released to the public on 17-04-2009. Afterward different world governments, particularly those in the West, have increasingly begun targeting tax havens and intensely began pursuing black money. The US, and France particularly began a huge campaign against the evil of black money. The estimates black money lodged in tax havens by global financial institutions like the International Monetary Fund reached as high as $18 trillion. The instability in the global financial order itself was traced to the evil money. So the issue has now acquired a totally different dimension. In the first Interim Report, the Task Force had suggested broad national and global strategy for dealing with the menace of black money out of the country. The substance of the recommendations of the Task Force in the First Interim Report is summarized here: Global Strategy: • Creating a powerful public opinion and broad national consensus on the issue. Those who do not...
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...Second Committee of the General Assembly Plenary The issue before the Second Committee of the General Assembly Plenary 2014 is: Increasing and coordinating efforts to fight international tax evasion. The World Bank is fully committed to the fight against international tax evasion as the profit made from either corporate or income tax can be used to support the affected countries in various ways, such as improved commitment to the UN or the World Bank committee. The WB is deeply concerned about tax evasion and its consequences concerning the world and its economy. By making use of non-standard tax havens or offshore banking accounts, companies and individuals exploit their country and therefore damage the country’s liability and economy. As that unjust advantage deceives the affected country, it is a major threat not only to that, but also to the world’s economy. The World is of the mind that, even if only a minority, not paying your tax imposes an unfair burden on the honest majority and prevents money from reaching the crucial public services that need it. One must stop people cheating the tax system and collect more of what is owed. The British tax gap in the 2010 to 2011 financial year was estimated to be £9 billion formed of tax evasion and avoidance. Losses caused by corruption and tax evasion are powerful examples of how criminal activities can potentially have tremendous negative effects on economic development. Also, ill-gotten money is not spent on productive investments...
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...Introduction There are many key component of a case. Some of these things include the evidence, the witnesses and the expert witnesses. One of these expert witnesses includes the forensic accountant, which has become a common use within the courtroom. This paper will discuss the five most important skills that a forensic accountant needs to possess, the role of a forensic accountant within a courtroom environment, the legal responsibility a forensic accountant has while providing service to a business, and two cases where forensic accountant have provided vital evidence in a case. It will also summarize the accountant’s role during the cases. Five Most Important Skills The five most important skills a forensic accountant needs to possess are private investigator, research skills, analytical abilities, accounting and task manager. Private investigator skills are important because they have to be able to gather information about the case. They have to be able to provide hard facts about the case to prove that fraud is actually accruing within the company or towards the company. They also have to go undetected that way important things that can help a case will not be cover up nor erased. They also have to possess research skills. This way they can gather only the important facts that can help with the case because they do not want to enter evidence that can harm the case or that does not have any relevance to the case. Analytical abilities are essential because...
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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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...as various stakeholders and experts are consulted. 1. 1. Table of Contents Preface ...................................................................................................................................................... 1 Introduction ................................................................................................................................... 2 1.1 1.2 The merits of GST ................................................................................................................................ 2 Urgency .................................................................................................................................................... 2 Desirable features of Goods & Service Tax Network (GSTN)........................................... 3 Stakeholders .......................................................................................................................................... 4 Workflows ............................................................................................................................................... 5 A common GST portal ....................................................................................................................... 6 Basic solution architecture ............................................................................................................. 7 Information...
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...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 international...
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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 or...
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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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...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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...third-party verification of taxable income. There is a lot of that in Scandinavia, but even so Sweden remains an outlier. The second one only seems to apply to Denmark: It has a clean and transparent tax system, without many loopholes and deductions. This keeps people from sheltering their income. It also keeps high-income foreigners from coming to or staying in your country. (Native Danes, in contrast, seem to be quite attached to their homeland.) Third, the Scandinavian countries subsidize a lot of things that are complementary to work – such as education, child care, elder care and transportation – thereby compensating for their high taxes. Here again, they are outliers. Other Organization for Economic Cooperation and Development countries reach very similar participation rates with very low levels of such subsidies. Would those policies work in other countries? Perhaps. But perhaps they are all just manifestations of a highly productive public sector that the people like to put to use to do stuff. Furthermore, the high taxation caused a lot of issue. One of the issues is inadequate income, the total outcome of all of the effects listed below is a large tax burden. And only workers feel the brunt of this burden, because only workers create wealth. When all of these effects are combined, the tax burden on the average worker is currently about 73 percent of income. So people can't live on their incomes. Second, it also causes the issue of low wages. Multiple government levy so many taxes...
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