...Topic 9 Question 4: The measures that can be adopted to prevent tax revenue losses from multinational companies are as follows; a) Thin Capitalisation Legislation is were a country prevents interest deduction if the ratio of debt to equity is in excess of a permitted amount. Some countries even limit the amount of debt that a subsidiary may borrow in relation to its equity base. When the interest exceeds the specified limits the interest paid from the excess debt is not tax deductible and can even be regarded as a dividend. b) Controlled foreign company legislation prevents companies based in tax havens which are controlled by a non resident shareholder from 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...
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...Growth Markets professionals are dedicated to serving the changing needs of fast-growth companies. Whether working with dynamic mid-cap companies or early stage venture-backed businesses, our professionals around the world draw upon their extensive experience, insight and global resources to help growing businesses reach their full potential. As well as providing traditional assurance, advisory, tax and transaction advisory services, our professionals work with you to reduce the complexity of legislation, help align your tax strategy with your business goals, expand into new markets and pursue mergers, acquisitions or other strategy transactions to take your business to the next level. We can provide guidance around how to manage and control your risks, so that you can approach the future with confidence. So whether your business thrives on entrepreneurial spirit, innovation or superior customer service – and regardless of your stage of growth – our Strategic Growth Markets team can help you take the next step. It’s not luck that makes leaders. Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young...
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...individual must deal with double taxation, he or she may lose a significant portion of income. In some cases, this may cause the double-taxed individual to experience a lowered standard of living. Corporations deal with double taxation too, as a corporation pays taxes on its earnings only to have its shareholders taxed once more. Double tax treaties comprise of agreements between two countries, which, by eliminating international double taxation, promote exchange of goods, persons, services and investment of capital. These are bilateral economic agreements where the countries concerned evaluate the sacrifices and advantages which the treaty brings for each contracting state, including tax forgone and compensating economic advantages. Double taxation arises when an individual or business acquiring income in a foreign country is required to pay taxes on that income in both the foreign country as well as the country of origin. For example, an American company operating in a developing country, in the absence of a tax treaty between the two countries may have to pay a withholding tax to the government of the developing country, as well as corporation tax to the United States government. Double taxation is always considered to be one of the most important issues in international taxation. With the more and more business moving towards globalization and cross-border investment, double taxation is often cited as a major obstacle to liberate economic progress. There are basically three...
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...have very high standard….soo….plz make spare few hours for this and post me the answers na aku…….. These are the questions…….? Question 1 Why do some individuals consider tax deferred to be taxes saved? Is their reasoning logical? (4 marks) Question 2 Mr. Karma is an employee of XYZ ltd. He draws salary @Nu.20,000 p.m during the year 2010-2011. He occupies residential house at Thimphu. Its rent is Nu.6000 p.m. He is offered three alternatives by the employer: 1) The company pays the rent direct to the landlord, the tenancy being between the company and the landlord. 2) The company pays house rent allowance to karma @Nu.5750 p.m and karma pays rent of Nu.6000 p.m to the landlord-the tenancy being between karma and the landlord. 3) The company neither offers karma the house accommodation, nor the rent allowance. Karma pays rent of Nu.6000 p.m for the accommodation occupied by him. He requests you to advise him as to which option would minimize his tax liabilities and maximize the cash inflow after tax. (5 marks) Question 3 Governments 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 losses? (5 marks) Question 4 Maxisoft is a private company incorporated, managed and controlled in country...
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...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. He came up with the principles that: ‘A company resides, for the purposes of Income Tax, where its real business is carried on … I regard that as the true rule; and the real business is carried on where the central management and control actually abides’. It is very important that when one is using offshore structures to do business in a foreign jurisdiction to always ensure that...
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...information via computer networks through the use of internet”. It offers a new way of conducting, managing and executing business transactions using modern information technology without any geographical barriers. It has redesigned the traditional mode of business which is based on –physical presence and physical delivery of goods and services. E-commerce is any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services. This article is an attempt to highlight the key issues in the area of ecommerce taxation analyzing and understanding the existing tax legitimate. Since EC can be conducted virtually instantaneously around the globe and around the clock, the question where the profits should be taxed becomes crucial. Taxing the Internet is a topic haunting governments from all over the world. The Need To Tax The e-commerce industry of India is one of the fastest growing segment in the Asia Pacific region. With a staggering CAGR of 34.58% from 2009 to 2012, the Industry has expanded from INR 19249 Crore (USD 3.49 bn) to INR 47,349 Crore (USD 8.60 bn) in a matter of 3 years. Electronics and Apparel are the biggest categories in terms of sales. This year electronics items like mobile phones, laptops, cameras, home appliances, personal products like apparels and jewelry and other accessories had a market share of worth Rs. 2,550 crore, which is expected to grow by 30% next year. Overall e-commerce market is expected...
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...Growth Markets professionals are dedicated to serving the changing needs of fast-growth companies. Whether working with dynamic mid-cap companies or early stage venture-backed businesses, our professionals around the world draw upon their extensive experience, insight and global resources to help growing businesses reach their full potential. As well as providing traditional assurance, advisory, tax and transaction advisory services, our professionals work with you to reduce the complexity of legislation, help align your tax strategy with your business goals, expand into new markets and pursue mergers, acquisitions or other strategy transactions to take your business to the next level. We can provide guidance around how to manage and control your risks, so that you can approach the future with confidence. So whether your business thrives on entrepreneurial spirit, innovation or superior customer service – and regardless of your stage of growth – our Strategic Growth Markets team can help you take the next step. It’s not luck that makes leaders. Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young...
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...taxes they pay? Well your multinational companies do what we call treaty shopping to find out what taxes each country has that will affect the bottom line of the company. In this paper it will define international taxation, define treaty shopping, and define tax haven and what factors that a multinational company looks at that effect the placement of the company’s headquarters. In today’s society more and more corporations want to go international or become a multinational corporation, at the same time there is a growing concern on different tax laws of the different countries. To have a complete understanding of multinational taxation we must first define what international taxation. According to Wikipedia “International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries or the international aspects of an individual country's tax laws. (Unknown, 2012)” The governments of the different countries make up the different tax laws base on if it is residential or commercial income. Some countries have a taxation system in place while other does not. The biggest is to know where to look for those taxations. In order for corporations that want to go international they must secondly do some research on the different countries taxes. In order to figure out the different taxes the corporations that are going multinational they must first look into the treaties of the county. This is where most or all the different rules of...
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...CA Dayavanti Khilolani 28th January 2012 2 • • • • • • • Introduction to Section Chargeability of Sum and TDS rate determination Section 90(2) of the IT Act Section 206AA of IT Act Issuance of Form 15CA / 15CB process Revised guidelines of NSDL (major differences) • • • • • • Why DTAA and What is DTAA? Principles and Purpose of DTAA Nature and Types of DTAA How do treaties remove Double taxation Structure of a typical DTAA and major Models Conventions used in world Applicability of DTAA Interpretation techniques of DTAA How to determine which DTAA is applicable and how to apply that DTAA Some important concepts used in DTAA Some important points to remember 3 Problems faced while uploading • Form 15CA • • • CA Dayavanti Khilolani 28th January 2012 CA Dayavanti Khilolani 28th January 2012 4 Tax Payer resident of State A Operating in State A State B State C Each state having its own tax system and rights over taxpayer Double taxation of Income in the hands of taxpayer Economic Double taxation Juridical Double Taxation Same Income taxed in two states in the same period in the hands of different taxpayer Same Income taxed in two states in the same period in the hands of same taxpayer Elimination of Double Taxation Via Double Taxation Avoidance Agreements CA Dayavanti Khilolani 28th January 2012 5 ...
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...the draft Direct Tax Code (‘DTC’) along with a Discussion Paper in August 2009 for public comments. Various stakeholders have provided their feedback and the Government subsequently released a Revised Discussion Paper in June 2010 addressing some of the key concerns on the DTC. The DTC would replace the existing direct tax legislation constituted by the Income Tax Act, 1961 and the Wealth Tax Act, 1957 with effect from April 1, 2011. It aims to simplify the language with an intention to remove uncertainty in interpretation of the tax law and mitigate undue litigation. While most of the provisions in the DTC meet these objectives, there are certain provisions relating to Minimum Alternate Tax (‘MAT’), General Anti-Avoidance Rules (‘GAAR’) and Determination of Residential Status of Foreign Corporate, which could have adverse and undesirable consequences. This term paper provides an overview of the key proposals in the DTC and their impact on both domestic and international businesses in India. Introduction The compatibility and conduciveness of a taxation system plays an important lubricating role in the overall growth and direction of an economy. Tax laws are often seen not as a mere framework for the government to collect revenues, but as an effective tool to direct and propel the economy to higher levels, more so in a developing economy like Indian economy. The government of India proposed several changes in the tax system from time to time. The new Direct Tax...
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...Grossman MICHAEL HIRSCHFELD is a partner, and Shaul Grossman is an associate, in the New York City office of the international law firm of Dechert. Mr. Hirschfeld is a member of the ABA Tax Section’s committees on Real Estate (of which he is the past Chair), Foreign Activities of US Taxpayers, and US Activities of Foreigners & Tax Treaties, among others, and has written for The Journal on many occasions. Copyright © 2000, Michael Hirschfeld and Shaul Grossman. The complexities of FIRPTA and the even broader withholding scheme that backs it up require that a nonresident acquire a thorough understanding of the rules before making an investment in real estate. The choice of whether to use an entity—and which one—or to hold the investment directly, as well as the type of investment—equity or debt—can have significant and sometimes expensive consequences. Edited By Sanford H. Goldberg, J.D., and Herbert H. Alpert, J.D. The global economy is a fact of life at the start of the new millennium. One consequence is that cross-border investments in real estate will expand significantly. Twenty years have elapsed since Congress enacted the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) to ensure that foreign investors are subject to at least one level of federal income tax when they dispose of U.S. real estate investments. Notwithstanding FIRPTA’s simple, clear-cut directive, foreign investors still face a host of planning opportunities and potential...
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...By reducing social security contributions and payroll taxes on low-income workers, they become more attractive to companies and support the development of labor skills as they stay in positions longer. Another example that would help bridge the gap is reducing a wide range of tax deductions, credits and exemptions which benefit high income recipients disproportionately. More importantly there needs to be an increase in transparency and international co-operation on tax rules to minimize “treaty shopping”, this process is when high-income individuals and/or companies use tax provisions in different countries structure their...
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...the two. A resident alien is taxed in the same manner as a U.S. citizen, which means that their worldwide income is subject to U.S. tax. The resident alien must report their worldwide income, such as, interest, dividend, wages, or other compensation for services. They also must report income from rental property and royalties and any other type of income that they received during the taxable year on their U.S. individual federal income tax return. A nonresident alien is an individual from a foreign country who has not passed either the green card test or the substantial presence test. Nonresident alien’s income is dividend up into two categories: U.S. source income that is effectively connected to a trade or business in the United States or U.S. source income that is Fixed, Determinable, Annual, or Periodical (FDAP). Nonresident alien's income that is subject to U.S. income tax is generally divided into two categories; income that is Effectively Connected with a trade or business in the United States or U.S. source income that is Fixed, Determinable, Annual, or Periodical (FDAP) and is not effectively connected with a trade or business in the United States. For the rest of the paper I will mostly discussing income of nonresident aliens, because resident aliens are pretty much taxed in the same manner as U.S. citizens. “Under the current tax law, only income that is actually related to the conduct of a U.S. trade or business will generally be taxed at the usual individual or...
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...‘The role of government in creating the business climate’ At its inception in 1957, the European Union was known as the European Economic Community. It was created by the Treaty of Rome by six countries known as the Core Six – Belgium, Luxembourg, The Netherlands, Germany, Italy and France. It’s main mission being creating a common – tariff free market in favour of easier and more profitable trade. The European Union consists of The Council of Ministers, European Parliament, European Commission and The European Court of Justice. Britain joined the EU in 1973, however it was never fully committed to the European project. The EU now consists of 28 member states, however that is due to increase with the potential of more countries joining amongst which are Turkey and Ukraine. European Government: How the European government does affect UK business? The EU has a big impact on business in the UK. Thanks to the EU Britain is able to trade their goods and services such as cars and banking with other countries in the EU without tariffs. This enables swifter and more profitable trade. As well as that, the EU helps the UK trade their goods and services outside the EU because it is the second largest trade bloc in the world, competing with the USA and China. The EU has supranational policy making power on trade for all member state, including the UK. This means that whatever the EU decides on trade, the UK has to follow. Additionally, the EU imposes working conditions and minimum...
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...Introduction In order to provide effective anti-virus protection VMTEC Sys must think globally. With cyber crime on the rise, no country should be overlooked as the next viable source of a computer virus (Muncaster, 2009). Because China has the most economic opportunities and presents the greatest threat to the personal and small business computer VMTECH Sys has identified a strategic need to establish a research and development division to be physically located in China. This research paper will analyze and review the economic opportunities and threats that VMTECH R&D can expect to encounter as well as other market conditions which will affect the operations of a division located within China. Market Entry Method It is essential for VMTEC Sys to establish a presence in China. Rather than trying to import goods or services to sell, the company has chosen to establish a research and development division in China. VMTEC Sys will form a corporative joint venture known as VMTEC R&D, which will operate as a division of VMTEC Sys. The parent company will provide capital funds to entice participation of a local owner who will provide labor and manage the research and development division. In a recent article, written by a CPA, there are several reasons for establishing a business in China: Lower labor costs, opportunities for growth, and access to highly motivated and educated workforce (Rowbotham, 2009). By forming a corporative joint venture, the company will be able...
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