...Brazilian Accounting System: Inflation, Taxation, and the Adoption of International Financial Reporting Standards Introduction As the business world evolves to a higher level of integration with the increased ability to conduct business globally, international accounting is a subject that is becoming more relevant and increasingly more important to understand. Doupnik and Perera (2012) define International accounting on three levels through the standards and guidelines of supranational organizations, at the company level, and third through the standards, rules, and guidelines that exist within each country. Brazil is one of the top five countries to be considered an emerging market (Top 30 Emerging Markets 2012-2017). It is estimated that Brazil’s GDP will grow by roughly 22.3% between the years 2013 to 2017 making the country attractive to investors (The Top 20 Emerging Markets, 2013) . Brazil ranks as one of the top 4 countries for growth in the manufacturing and industrial industries, telecommunications, technology and media, professional and business services, financial services, consumer products, pharmaceuticals and healthcare, energy and resources, automotive, chemicals, and transportation industries (Top 30 Emerging Markets 2012-2017). In addition Brazil will be a destination for world class events such as the 2014 World Cup and 2016 Olympic Games that will bring thousands of visitors to the country. As Brazil continues to grow in popularity as a location for trade...
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...OFF SHORE FINANCIAL CENTRES Commercial Law Irene González Campos ZAGREB SCHOOL OF ECONOMICS AND MANAGEMENT Content DEFINITION 3 HISTORY 3 CHARACTERISTICS 4 REGULATION 5 CONCLUSION 6 References 7 DEFINITION First of all, it needed to be said that a financial centre is defined as a city or district that has a heavy concentration of financial institutions, that offers a highly developed commercial and communications infrastructure, and where a great number of domestic and international trading transactions are conducted (Business Dictionary, n.d.). London, New York, and Tokyo are the world's premier financial centres. It may be distinguish two types of financial centres: those such as London or New York, which are ‘international financial centres’ and which are excluded from the definition of extraterritorial centres. These latest are called ‘Offshore financial centres’, where the activity takes place outside the residence of the natural person. Despite its name, the off-shore centres are not necessary islands, although several insular jurisdictions have been established as such. First of all, an off-shore centre is a small, law-taxes jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, by offering: i) Liberal legislation regarding financial transaction ii) Very low taxes rates Therefore, off shore companies are those legal entities incorporated and registered in an offshore financial centre...
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...The case of Crown Insurance Services brings to the light the many issues now associated with the changing business environment, the questions that arise whether current existing law regrading residence and source is no longer fitting and whether its application may be conducive for cases where misappropriation is intentional. This paper considers some of the questionable reasoning used today by the courts in determining residence and source on companies incorporated overseas. The case of Crown is not dissimilar to that of Malayan Shipping Co, whereby an Australian resident (Mr Sleigh) the majority shareholder of a taxpayer company incorporated overseas, was considered to be the managing director and agent who alone could decide upon the entering of contracts by the company in Australia. The company was found to derive its income and have tax residency in Australia “despite the directors being non-resident and meeting outside Australia” due to central management and control being held by an Australian resident. Similarly in Crown several indicators of absolute authority held by an Australian resident were presented, including “All of the proposals were prepared by Mr. Pattenden on his lap top” and “Mr. Pattenden prepared a group insurance proposal and prepared and issued a policy”, these statements seemingly present Mr. Pattenden as being ‘the brains behind operation’. The commissioner pursued this as it had been in Malayan shipping, however several factors prevented the...
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...The great ‘subprime’ crisis has had its share of fallouts over past 24 months; yet there is a silver lining emerging from under the dark clouds which has the world order gearing up for a brand new era of financial discipline and enhanced regulation. Ironically, one of the positives borne out of the recent economic upheaval has been staggering focus on ensuring robust transparency standards in tax matters. Before delving further into how tax transparency and information exchange are critical for sorting financial disorder across economies, let me try and explain the concept of ‘money laundering’ and how the absence of strict standards in tax discipline have abated this menace. This also helps putting in perspective the role that the international tax policy, in tandem with other non-tax measures, plays in combating tax evasion, whether with or without aid of money laundering. What’s the color of money!! Money laundering is loosely used to describe ‘washing’ of unaccounted or illicitly sourced money through a cobweb of complex financial transactions, usually involving more than one jurisdiction. The objective of the process deployed to ‘clean’ the money is to hide either the ownership or the destination of such funds. A typical ‘laundering’ scheme could see three stages: a) Placement stage – at this stage, the objective of stakeholders is to move the illicit funds away from source location; sources of such funds can be traced to ‘cash intensive’ illegal business (such...
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...MT570 Taxation (Current Topics) Assignment 2 Question 1 The draft tax determination TD 2009/18 – Income Tax: Can a private equity entity make an income gain from the disposal of target assets it has acquired? – deals with private equity entities disposing of Australian target assets, and per this draft determination, the ATO’s view on this is that yes a private equity entity can make an income gain on the disposal of such assets, although they do acknowledge that each case will depend on fact and circumstance. The draft determination basically states that where a foreign private equity entity that is not in a treaty country carries on a business of deriving a profit from the sale of an Australian asset then the profit is ordinary income under section 6-5 of the ITAA 1997 which is taxable in Australia and is not exempt as a capital gain. Whether a private equity entity can make an income gain on the disposal of its target assets will be a question of fact and circumstance. It will need to be determined on what account the asset was being held on and in order to determine this. The investment strategy and the form and substance of the private equity entity must be looked at in detail and at length to determine this. Basically, if the intent of the private equity entity is to acquire the target asset, become a long term investor and derive dividend income from its shares then the gain made from disposal would be held on capital account as the disposal would be...
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...location of untaxed wealth. Globalization and the liberalization of economic activity, resulting in the exponential increase in cross border commercial and financial transactions, has in effect converted the private sector into a world without borders. This has created a major problem for national tax authorities because globalization in the private sector has not been accompanied by similar changes in the reach and enforcement powers of national tax authorities. 1.2 In confronting the impact of globalization and liberalization of economies, national tax authorities face several problems. Some of them are illustrated below: 1. National tax authorities has administration of one national government. 2. There is no concept of International tax administration yet. 3. There is a traditional legal rule that one government does not enforce the tax laws of other governments. 4. Bank secrecy and other confidentiality laws (“de jure bank secrecy”) in many jurisdictions prevent the...
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...Question 3 Government around the world are becoming increasingly sensitive to the loss of revenue resulting from multinational companies moving into other jurisdictions, most particularly tax havens, to lower their overall rates of tax, what are some of the measures that can be adopted to prevent such revenue loses? A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate. This is another important technique where the multinational companies can reduce their tax liability. If a company wants to expand and conduct their business in the country where the tax rate is very low or no tax rate, then they can reduce their tax liability to zero or very minimal amount. Tax havens are an internal fight as tax jurisdiction is an integral part of sovereignty and with this in mind, we should consider the measures usually used by states in order to prevent the use of tax havens: general avoidance provisions, the establishment of foreign exchange control and mandatory withholding of tax on transfers abroad, the creation of provisions against base companies, specifically by attributing income earned by such companies to the resident partners who control them, as well as the introduction of legislative giving powers to the tax authorities to adjust taxable profit by reason of special relations with another taxpayers. Tax havens make it more expensive for developing...
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...between the US, Irish, Dutch and Caribbean tax systems facilitate MNC’s in minimising their global tax bills? In order to minimise their global tax bills, MNC’s engage in a tax avoidance technique known as the ‘Double Irish with a Dutch Sandwich technique’. It is a technique employed by certain large corporations, involving the use of a combination of Irish and Dutch subsidiary companies to shift profits to low or no tax jurisdictions. In this essay I am going to explore this tax avoidance technique and give a step-by-step guide as to how large MNC’s such as Google use it. First I am going to give an overview of this tax avoidance technique and why it is advantageous for an MNC to use. This technique is just one of a class of similar international tax avoidance schemes that has allowed MNC’s to dramatically reduce their overall corporate tax rates. It in essence involves sending profits through one Irish company, to a Dutch company and finally to a second Irish company headquartered in a tax haven. These techniques are most prominently used by technology companies because these firms can easily shift large portions of profits to other countries by assigning intellectual property rights to subsidiaries abroad. Each step in the ‘double Irish with a Dutch sandwich’ technique involves arranging transactions between subsidiary companies to take advantage of the idiosyncrasies of varied national tax codes. For decades MNC’s have been taking advantage of the ‘quirk’ in the Irish tax law...
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...retaining profits earned in that country so as to prevent the taxpayers country from collecting tax revenue from that profit. The legislation requires the taxpayers to include the profits which are attributable to the taxpayer even if the controlled foreign company pays a dividend or not. c) Transfer pricing is were companies attempt to minimise tax by selectively allocating income and expenses between domestic and foreign entities, whereas transactions between entities are still required to be dealt in an arms length arrangement with transfer pricing this does not occur . Countries that have enacted anti-transfer pricing legislation recalculate the enterprises taxable profit using arms length pricing which is not recognised in the International Accounting Standards Section 27 Consolidated and Separate Financial Statements. Some of the methods used by countries are • Comparable uncontrolled price method • Resale price • Cost plus method Topic 10 Question 1: (a) The tax implications for Bill Bates as he is working in Country B he would have withholding tax even though he is only a temporary resident of Country B. For this reason Bill Bates would be allowed to get an exemption or a credit...
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...BR100 Application Setup Document ADDING NEW OPERATING UNIT - FINANCIALS Author: Creation Date: Last Updated: Version: 1.0 Release: 11.5.10 Contents SA: Review Multi-Org Profile Options 1 AP: Choose Set of Books 2 PO: Define Inventory Organization Parameters 3 AP: Define Financial Options 4 AP: Define Expense Report Templates 6 AP: Define Payables Options 7 AP: Define Banks 10 AP: Define New AP Signing Limits 13 AP: Define Tax Codes 14 AP: Define Tax Groups 15 AP: Define Tax Reporting Entities 16 OIE: Define iExpense Policies 17 Enable Expense Allocations 17 Set Up Required Expense Fields 18 Define Receipt Notification Rule Set 19 Assign Receipt Notification Rule Set 20 Define Mileage Rate Schedule 21 SA: Set OIE Profile Options 23 AR: Define AR System Options 24 AR: Open...
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...Corporate Residence in the Modern World Name Course 1.0 Introduction This phrase ‘central management and control’ was coined by Lord Loreburn in the landmark case ruling of De Beers Consolidated Mines Ltd v Howe (1906) 5 TC 198 at 213 in the early years of the 20th Century. Case Background Previously, the company’s headquarters was at Kimberly meaning that almost all its general meetings were carried out there. Its main business was Diamond Mining in South Africa which were sold through contracts that ran annually for delivery in South Africa. Some of the company’s directors were South African Residents and these directors meetings were carried out both in Kimberly and London in the United Kingdom. But looking at the composition of its directors, most of them were England residents. Meetings that were held in the English Capital were used to make most of the key decisions that impacted greatly on the direction of the company’s business. The London based office was the one that engaged in all of the negotiations concerning contracts with the syndicates that bought the diamonds. This office was also the one that determined how the mines were to be developed, directors’ appointments etc.In short, it was London that controlled and imposed the key decisions taken by the company directors that even affected Kimberly and its activities in South Africa. Lord Loreburn, after reviewing all these facts, found it appropriate to treat the Company as a resident of the United Kingdom...
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...to acquire profit to rich your pocket.The definition of resident for company is in ITAA36 s6(1) state that:A company which is incorporated in Australia, or which, not being incorporated in Australia carried on business in Australia, and has either its central management and control in Australia, or its voting power controlled by the shareholder who are resident of Australia. Page 77 understanding taxation law 2010 Frank GildersBut the current definition of Australia of residency company do perform a highly compulate system and the double tax with a higher tax rate, which is discourage the over-sea investor and bring trouble to Australian itself. – the decrease the competitive ability in the international trading and business market. Analysis :There are many different kind of business cooperation in which investors can do business in Australia, including corporations, branch offices, subsidiaries, trusts, joint ventures and partnerships. For the international investors, the most common way are usually form a Australian subsidiary companies or Australian branch offices. Owing to the Australia tax law, both of them have a same standard corporate tax rate. However most foreign companies choose to operate through a locally established subsidiary company, since this has the added benefits of limited liability and separate legal status. A foreign company that intends to do business in Australia must register with the Australian...
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...Taxation is said to be one of the key governance tools of any state including the upholding of Zambians sovereignty. INTRODUCTION The most fundamental function of taxation is raising revenue to pay for governmental expenses and programs. "Taxes are necessary to raise revenue for public goods and infrastructure, as well as to provide other sorts of public services conducive to general welfare and economic growth." Tax revenues pay for the necessary goods – like national defense or a legal system – that an unregulated market cannot provide by itself. More often overlooked is the role of taxation as a catalyst for the development of responsive and accountable government, and for the expansion of state capacity. Taxes, however, do more than simply raise revenue: "Any tax that produces revenue will in some way alter the social and economic order." Taxes that only raise revenue without effecting other changes do not exist in the real world. The concept of fiscal policy captures that link between revenue collection and government spending. More specifically, taxes can be used to increase or decrease inflation and purchasing power, stimulate investment, and prevent harmful concentrations of wealth. Taxation is an underrated tool in the effort to build more capable and responsive states. The role of taxation as a central force in the development of democracy resonates strongly in Anglo-American history. The duty of paying for government legitimizes demands for services...
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...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 biggest...
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...TAXATION PAPERS WORKING PAPER N.33 - 2012 Serena Fatica Thomas Hemmelgarn Gaëtan Nicodème The Debt-Equity Tax Bias: consequences and solutions Taxation and customs union Taxation Papers are written by the staff of the European Commission's Directorate-General for Taxation and Customs Union, or by experts working in association with them. Taxation Papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses. The views expressed in the Taxation Papers are solely those of the authors and do not necessarily reflect the views of the European Commission. Comments and inquiries should be addressed to: TAXUD TAXATION-PAPERS@ec.europa.eu Cover photo made by Milan Pein Despite all our efforts, we have not yet succeeded in identifying the authors and rights holders for some of the images. If you believe that you may be a rights holder, we invite you to contact the Central Audiovisual Library of the European Commission. This paper is available in English only. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through EUROPA at: http://europa.eu. For information on EU tax policy visit the European Commission's website at: http://ec.europa.eu/taxation_customs/taxation/index_en.htm ...
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