Tax Avoidance

Article published by Tax Justice Network Blog april 10th 2017 in: https://www.taxjustice.net/2017/04/10/tax-haven-blacklisting-13-latin-american-countries/

As governments (slowly) get to grips with the fact that tax havens are inflicting great harm on economies and democracies across the globe, facilitating mega amounts of tax dodging, and vast movements of criminal money by way of the secrecy services some of them offer, the question of our times is how we deal with them. Attempts to create tax haven blacklists (in order to potentially implement sanctions for non-cooperative jurisdictions) have so far been farcical as we’ve noted many times, most recently commenting on the European Union’s current work compiling its own blacklist system, here and here. So far the criteria for inclusion in tax haven blacklists has been weak, such lists have been ineffective and it’s been far too easy for some of the world’s worst offenders to wriggle their way out of them, or simply be big and bad enough not to worry about being included in the first place – for example – Tax Haven USA. If the EU, or anyone else really wanted to do this properly, the work’s already been done for them – with the best objective ranking available – the Tax Justice Network’s Financial Secrecy Index.

Anyway, we were very interested to see that Brazil attempted to tackle Irish tax havenry in September 2016 by putting Ireland on its tax haven blacklist, effective more or less immediately.

Today we’re happy to share an article by Macroeconomics Professor Juan Valerdi[1] (of La Plata National University and El Salvador University) based on the conclusions of his research looking at the approaches of 13 Latin American governments to tackling tax havens. The full document is available here and was part of the campaign “Que las trasnacionales paguen lo justo”. The Spanish version of this article was published by ALAI Magazine earlier this month and is available here. (You can read the Professor’s blog here).
While this article looks at what’s happening in Latin America, the conclusions and recommendations represent an approach to solve what he refers to as the ‘Tax Haven Networks’ problem at a global level. His research focused on 13 Latin American countries: Argentina, Bolivia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, México, Nicaragua, Paraguay and Peru.

This paper will consider the political nature of the discourses of responsibility for tax avoidance and benefit-claiming. Section 1 will begin by establishing a theoretical framework for understanding the social-democratic capitalist state, building on Bonefeld’s (2012) analysis of ordoliberalism. This framework will posit that the social-democratic state requires the economy to function optimally in order to best fulfil its telos, or raison d’être. Following this, it will show that benefits recipients and tax avoiders are both groups that undermine the optimal coordination of the state economy (according to the framework constructed).  Section 2 will then consider the discourses regarding both of these sub-sections of society, concluding that the issues of tax avoidance and unemployment are both depoliticised, but in different ways. This section will suggest that these depoliticisations unjustly put more responsibility on benefits recipients. Finally, Section 3 will consider why the state chooses to do this.

Si critica la teoria, di matrice giurisprudenziale, secondo cui l'art. 20, t.u. registro, può essere utilizzato per tassare unitariamente più atti tra loro collegati. Si esamina poi il rapporto tra l'art. 20 e la nuova norma generale antiabuso, prevista dall'art. 10-bis, Legge n. 212/2000, definendone i rispettivi campi di applicazione. In tema, v. anche Tabet, in Rass. trib., 2016, 913.

ABSTRACT: This study investigates how private equity ownership affects corporate tax avoidance. Private equity (PE) firms have been accused of aggressively managing their own tax liabilities and those of their portfolio firms. We investigate the latter assertion based on ...

Italy has recently introduced a GAAR in its tax system. While the wording of the clause is not original, considering the experience the other countries might have about it, it is the context in which the provision shall operate that arose the interest of the firs commentators.
The article considers is particular the ways in which it will be arguably applied, taking into account the similar (although tailor-made) regulations that address the phenomenon, and that that have not been repealed by it. Treaty based, EU inspired, special law enacted clauses are still there and may potentially collide with the GAAR, making the overall outcome unpredictable for the Interpreter and for the taxpayer as well.

This article analyses the second Anti-Tax
Avoidance Directive and its role in countering
deduction and non-inclusion schemes caused by
the use of hybrid financial instruments in thirdcountry
situations, in the light of primary EU
law and Action 2 of the OECD/G20 Base Erosion
and Profit Shifting initiative and its underlying
justifications.

In 2012, public opinion focussed on what has been called 'aggressive tax planning of multinational enterprises'. Since then, the G20 and OECD developed the Base Erosion and Profit Shifting (BEPS) Action Plan – a phenomenon that has received enormous attention. Despite this attention, the efforts, methodology and outcomes, and the instruments used to implement them, pose very little innovation. This article analyses the issues raised by the BEPS Action Plan from a historical perspective, showing that they remain grounded on the same basis of discussions that took place decades ago. This is probably because the project was triggered by a decrease in tax revenue, and not by an actual study of the failures of the system. The only real innovation of the BEPS Project is the change in the public state of mind and attitude towards tax planning, as well as a totally new way of developing international tax rules through consensus with the participation of a broad number of countries. Future steps should take advantage of this actual innovation, get rid of previous analysis and, taking into account of the current economic situation, study (1) the structure of the tax system and tax burden; (2) the jurisdiction to tax rules and the source and residence principles; and (3) the relationship between private law and tax law, i.e. legal personality and recognition of foreign persons and contracts. Without such in-depth analysis, any changes would be changes that only deepen already existent failing principles forming the base of the current system.

This study designs an international tax plan of a hypothetical company, Fotabetech Inc, that minimize the consolidated tax liability using approaches that have been empirically tested and identified. The study recommends the following approaches as highly suited for high tech firms in shifting profit from high tax to low tax jurisdictions: use transfer pricing of intangible (Intellectual property) in tax haven and charge affiliates big fees for using them; use intercompany debt to form a tax shield;  if firm is technology intensive with intangibles, it should set up tax haven subsidiaries in low tax countries and if a Multinational is heavily leveraged let it relocated its Global Headquarters to a Low tax country

La circolare n. 27 del 18.12.2018 costituisce l'occasione, per Assonime, di commentare brevemente la nozione di «abuso del diritto» domestica, in relazione a quella contenuta nella Direttiva n. 2016/1164 (cd. ATAD 1): ne emergono, accanto alla sostanziale identità tra la clausola generale anti abuso di matrice comunitaria e quella interna contenuta nell'art. 10-bis della Legge 212/2000, alcune riflessioni sparse, derivanti dai principi elaborati dalla giurisprudenza europea, che suggeriscono come la questione sia meno ovvia di quanto appare.

ÖZET Gerçek lehdar kavramı uluslararası vergi hukukunda genel olarak kabul görmesine ve hemen hemen tüm çifte vergilendirmeyi önleme anlaşmalarında kullanılmasına rağmen, terimin hukuki niteliğinin ne olduğu konusunda görüş birliği oluşmamıştır. OECD Model ve Birleşmiş Milletler Model Vergi Anlaşmaları 10, 11 ve 12. madde hü-kümleri çerçevesinde " gerçek lehdar " müessesesi, çifte vergilendirme anlaşmaların-da yer alan faiz, temettü ve gayri maddi haklarından doğan kazançlara ilişkin olarak geliştirilmiş bir güvenlik mekanizmasıdır. Kural olarak sözü edilen kazançlara ilişkin vergilendirme yetkisi, ödemenin yapıldığı kişinin mukim olduğu ülkeye aittir. Ancak, bu kazançlardan bazıları için gelirin doğduğu kaynak ülke de üst sınırı belli olmak üze-re vergilendirme yetkisini kullanabilmektedir. Bununla birlikte, bu üst sınırlama, ilgili ödemelerin yapıldığı diğer anlaşma devleti mukiminin ilgili gelirin gerçek lehdarı olduğu durumlarda geçerlidir. Bu bağlamda, milli mahkemeler anahtar terim olan gerçek lehdar kavramını farklı şekillerde yorumlamışlardır. Gerçek lehdar müessesesinin hukuki niteliğinin farklı yorumlanması, ilgili kazancın çifte vergilendirmesine veya hiç vergilendirilmemesine yol açmaktadır. Dolayısıyla, bu durum uluslararası sermaye hareketlerini engellemekte ve devletlerin bütçelerini finansal yönden negatif etkilemektedir.

ES: Estudio monográfico sobre las formas de configuración del delito de defraudación tributaria en Venezuela, bajo la vigencia del Código Orgánico Tributario de 2001, respecto del impuesto al valor agregado.  La monografía analiza la muy escasa jurisprudencia que sobre el delito ha sido emitida en Venezuela. Estas decisiones acompañan a la obra, bajo la forma de un apéndice sistemático.

EN: Monographic study on the ways of committing tax fraud in Venezuela regarding value-added tax, under the validity of the Organic Tax Code of 2001. The paper analyses the very scarce case law on the topic existing in Venezuela. These decisions accompany the text in the form of a systematic appendix.

In this thesis, I examine if private disclosure of tax avoidance schemes reduces corporate tax avoidance. To examine this question, I determine the change in tax avoidance of firms around the introduction of Disclosure of Tax Avoidance Schemes legislation (DOTAS). Under DOTAS, firms in the United Kingdom (UK) are required to disclose new tax avoidance schemes to the UK tax authorities (HMRC) before implementing a new tax avoidance scheme. I expect firms with more tax planning opportunities to avoid less taxes after the implementation of DOTAS, compared to firms with less tax planning opportunities. However, I find no systematic evidence to support my expectations. The results remain consistent after I control for the differences in industry environment.

Tax planning is one of the key aspects of financial planning from a tax perspective. Efficient tax planning enables every taxpayer to reduce the tax liability to the minimum. This is done by legitimately availing various tax exemptions, deductions under chapter VIA, rebates and allowances available under the Income Tax Act, 1961. The ever increasing functions of the government have naturally lead to increased expenditure, for instance, achieving the social and economic objectives laid down in the constitution, balancing regional economic growth, removing the concentration of economic power in few hands, reducing the inequality of income, and so on. The wealth of an individual is maximized by increasing the level of savings in various investment avenues. The key area of the research is to learn the appropriate popularly used tax saving instruments and also the factors influence the investment in those tax saving instruments. It is empirical research which will throw light upon the aspects of tax planning and ways to reduce the income tax liability.

In conventional accounting literature, ‘transfer pricing’ is portrayed as a technique for optimal allocation of costs and revenues among divisions, subsidiaries and joint ventures within a group of related entities. Such representations of transfer pricing simultaneously acknowledge and occlude how it is deeply implicated in processes of wealth retentiveness that enable companies to avoid taxes and facilitate the flight of

Se trata de un estudio de las medidas contra las estructuras de treaty shopping, prestando especial atención a las que se han articulado a través de la inclusión de cláusulas de limitación de beneficios en los convenios para evitar la doble imposición.

Notwithstanding there have been a number of studies regarding the beneficial ownership conducted by international organisations and distinguished scholars, the meaning of the term still remains ambiguous. To tackle the issue, the OECD has recently attempted to clarify the meaning of beneficial ownership concept. It is indicated that the initiation has made a constructive contribution to the subject but having said that a further clarification is required to provide an internationally well-accepted application. Particularly, it should be addressed that the beneficial ownership is distinguished from other anti-avoidance provisions and the distinction between related and unrelated obligations so as to determine the beneficial owner of the income concerned.
The aim of this paper critically examines the notion of beneficial owner in the light of the historical background and the recent developments of the term. It specifically intends to demonstrate leading interpretations on the meaning of beneficial ownership by reference to groundbreaking cases and prominent commentators. Subsequently, those interpretations are taken into consideration with the OECD Discussion Draft 2011 and the OECD Revised Proposals 2012. As a result of this thesis, the author has developed a “practical matter test”: the beneficial owner is the person who legally, contractually or factually has some power to use and enjoy the income concerned.

This work evaluates the effect of tax avoidance and tax evasion on  economic growth and development in  Nigeria  (2006-2016).  It  aimed  to  give  a  detailed  examination  of  the  effect of  tax  avoidance  on  the economic growth and development in Nigeria. The data gathered regressions model was employed to establish  the  relationship  between  dependent  and  independent  variables.  The  study  made  use  of
economy  approach  in  estimating  the  relationship  between  tax  avoidance  with  economic  growth  and development in Nigeria. The study revealed that there is no significant relationship between  economic growth and tax evasion and tax avoidance in Nigeria, the work also revealed that tax avoidance has no significant  positive  effect  on  economic  growth.  The  study  concluded  that  the  application  of  modern
equipped database of tax avoidance whose human resource practices would properly align to the used of  international  best  practices  would  improve  their  revenue  generation  in  Nigeria.  The  study  among other  things  recommended  that  the  federal  government  should  have  well  equipped  data  base  on  all taxpayers in federal, state and local government in Nigeria, and that the federal government should set up a federal revenue court to look into cases of tax avoidance and evasion. Also the government should ensure that jurisdictions of those courts are extended to states and local governments, offender should also receive prompt prosecution of tax evaders.

Along with intensified efforts to combat aggressive tax planning, observed at the international, the EU and national levels, the question of moral status of tax avoidance becomes acute. We are far from consensus as to how it should be answered.
The main purpose of this paper is to present and defend against certain counterarguments the argument following the pattern of Immanuel Kant’s categorical imperative in order to make a case for immorality of tax avoidance. This is done against the backdrop of previous meta-ethical remarks, concerning ethical strategies built to approach the problem of tax avoidance and its moral status.
The thrust of the argument is that tax avoidance infringes the Kant's moral principle – the Formula of Universal Law. The latter essentially demands that the agent’s rule of behavior (maxim) be such that it could be universalized without contradiction (or, as a matter of fact, any other offence to reason). A taxpayer engaged in tax avoidance violates internal rationality of the legal system and contradicts himself – his ‘maxim’ cannot be generalized. He assumes the existence of the law but acts in a way which if universally adopted, would make the law dysfunctional or nonexistent.
In a Kantian vein, the application of the categorical imperative to tax avoidance shows two aspects: egalitarian and dignitarian. These aspects are concurrently: typical for any elaboration of an argument following Kant’s line of reasoning and characteristic for the present-day reflection on law.

Tujuan penelitian ini adalah untuk menguraikan secara teoritis peluang dan
ancaman IFRS 16 leases terhadap aspek perpajakan di Indonesia. Penelitian ini
merupakan penelitian kualitatif deskriptif dengan data sekunder yang
dikumpulkan melalui teknik dokumentasi. Studi literatur pada literatur terkait
digunakan untuk menguraikan dampak IFRS 16 terhadap aspek perpajakan di
Indonesia. Berdasarkan studi yang dilakukan dapat disimpulkan bahwa IFRS 16
mengubah secara signifikan skema akuntansi sewa yang ada dengan
mengkapitalisasi operating lease menjadi financial lease. Perusahaan yang
memiliki posisi sebagai lessee terdampak berupa meningkatnya aset dan leverage.
Pemerintah dapat kehilangan potensi pajak atau mendapat peluang sumber
penerimaan pajak baru dari implementasi IFRS 16. keuntungan bagi lessor karena
meningkatnya cadangan kerugian piutang sewa yang dapat dikurangkan dari
penghasilan bruto atas financial lease sedangkan lessee dirugikan dengan
berkurangnya biaya yang dapat dikurangkan dari penghasilan bruto karena
pembayaran sewa financial lease tidak dapat dikurangkan dari penghasilan bruto.
Masih ditemukan ketidaksesuaian antar IFRS 16 dengan PMK yang mengatur
sewa guna usaha yang dapat membingungkan lessee dan lessor. Saran untuk
penelitian selanjutnya diharapkan peneliti selanjutnya dapat menghasilkan bukti
empiris dan kuantitatif atas pengaruh implementasi IFRS 16 terhadap aspek
perpajakan di Indonesia.

The Anti Tax Avoidance Directive (ATAD-1) is perhaps the most important goal achieved so far by the European Union in the struggle against international avoidance and evasion: it makes the most of the findings and recommendations OECD summarized in the BEPS action plan. The goal of this paper is to compare the solutions adopted by the EU in the directive with the domestic provisions already in force in some member States, including Italy and the UK. The methodology chosen is comparative in its nature. Qualified anti-avoidance provisions (such as GAARs and DPT) already in force on a national scale have be tested in order to see whether they are compatible with the new European guidelines and rules. The first findings allow the interpreter to draw different conclusions depending on the national rules tested. While for some of them, such as the DPT (Diverted Profits Tax) the consistency with OECD recommendations and EU law is uncertain, others (such as most of the National GAARs) appear to be already compliant with the new European standards. In this later case however, the influence of EU law will be arguably essential in terms of interpretation of the rule, widening or narrowing its scope, together with the need to counterbalance the power of the Tax administration with the protection of the fundamental rights of the taxpayer that some Administrations are reluctant to grant while making use of GAARs. The conclusions stress also the innovative double standard approach of the EU legislator that made use of different provisions (more or less aggressive towards the taxpayer) depending on whether the tax structure is European or involves also third Countries.

Il presente lavoro è stato elaborato dalla “Commissione di Studio-Diritto Tributario” costituita all‟interno dell‟Ordine dei Dottori Commercialisti ed Esperti Contabili di Arezzo su iniziativa del Consiglio dell‟Ordine e del suo Presidente Giovanni Grazzini.
La formazione di Commissioni di Studio ha lo scopo di promuovere studi, ricerche ed approfondimenti nell‟ambito dei settori e delle materie assegnate ed è un‟occasione importante per agevolare l‟attività di interpretazione delle leggi, la diffusione di conoscenza delle norme, degli strumenti e delle tecniche operative necessarie per lo svolgimento della professione di Dottore Commercialista ed Esperto Contabile.
Questo primo lavoro, coordinato dal Dott. Pietro Benedetti ha come finalità la divulgazione, tra tutti i membri dell‟Ordine, dell‟argomento dell‟Abuso di Diritto, esaminandone l‟attuale normativa, la più autorevole dottrina e la più significativa giurisprudenza sia nazionale sia comunitaria. Il tutto affrontato, discusso ed elaborato secondo le conoscenze ed esperienze dei componenti della Commissione.

Illicit Financial Flows (IFFs) are incresingly recognized in the wake of data leaks. These financial flows are not only keeping poor countries in dependence and poverties. They aim for the wealthy and developed countries of this world for investment and profit - Germany included. This chapter illustrates insights from interviews with tax administrators, police, prosecutors and other experts on various categories of IFFs such as corruption, money laundering, tax evasion, tax fraud, trade misinvoicing etc.

Pajak merupakan suatu gejala masyarakat, itu artinya pajak hanya dapat timbul apabila ada masyarakat. Begitu pula sebaliknya, apabila tidak ada masyarakat maka tidak akan ada pajak. Hal ini terjadi karena masyarakat terdiri dari individu-individu yang berkumpul di suatu tempat dalam jangka waktu pendek atau pun panjang dengan tujuan tertentu. Setelah masyarakat yang bersangkutan memutuskan untuk membentuk suatu organisasi (negara), maka kelangsungan hidup suatu negara dan individu-individu di dalamnya tentu memerlukan biaya. Untuk itu, dilakukanlah pemungutan pajak oleh negara kepada masyarakat.

Resumen: El presente artículo evalúa y plantea una crítica al Proyecto BEPS de la OCDE. En las primeras tres secciones del artículo se expone la lógica conductual de las empresas multinacionales, el contexto económico en el que se plantea la iniciativa BEPS y el desarrollo de las prácticas fiscales nocivas. En las secciones posteriores se aborda tanto los objetivos y principios del plan BEPS, como una evaluación crítica de su desarrollo. Finalmente, se concluye que el plan BEPS tiene defectos estructurales y funcionales que, aunque lo hacen el mejor esfuerzo contemporáneo para contrarrestar BEPS, es insuficiente para contener las prácticas de planeamiento fiscal agresivo por parte de las multinacionales.
Abstract: This article evaluates and proposes a critique on the OECD’s BEPS Project. In the first three sections of the article behavioral logic of multinational companies are exposed, as well as the economic context in which the BEPS initiative arises and harmful tax practices develop. In subsequent sections we approach the objectives and principles of the BEPS plan and also addressed a critique of its development. Finally, we conclude that the BEPS plan has both structural and functional defects, although they are the best contemporary effort to counter BEPS, it is insufficient to curb multinationals aggressive tax planning practices.
Palabras clave: Traslado de beneficios – Erosión de la base imponible – BEPS – Planificación fiscal agresiva – OCDE
Keywords: Profit shifting – Base erosion – BEPS – Aggressive tax planning – OECD

Objective and Method: The objective in this article is to review the international and Brazilian studies on tax aggressiveness, considered as the behavior of trying to avoid or minimize the explicit tax burden for the corporation. As an academic research theme, tax aggressiveness or tax avoidance reveals to be a diversified and vast topic, although relatively recent. Results and Contributions: Among the research questions developed in this theme, the identification of the determinants of the company's tax aggressiveness is highlighted, considering: (i) company characteristics; (ii) environmental attributes; (iii) gatekeeper restrictions; and (iv) incentives for the firms. The determinants of the managers' tax aggressiveness and the influence of governance and the control structure are reviewed. In addition, the potential economic-financial consequences of tax aggressiveness for the firms and the existing empirical proxies to measure tax aggressiveness are identified. The study is closed off with the presentation of future research opportunities on the theme.

The techniques that some large multinational corporations use to reduce their tax liability have come under increasing public scrutiny in recent years, alongside governmental investigations and international commitments aimed at curbing opportunities for tax avoidance. Although discussion of tax avoidance activities, and their regulatory responses, is often conducted with reference to moral concepts (such as ‘fairness’), philosophical analysis of the ethics of multinational tax avoidance remains limited. In particular, the virtue ethics tradition, that emphasises the agent (and his/her character), and the performance of specific roles has not been considered in detail. This paper examines how the contemporary virtue ethics of Alasdair MacIntyre can be applied to the issue of multinational tax avoidance, and considers the role that accountants play in these activities. It argues, firstly, that MacIntyre’s approach provides a more useful philosophical analysis of the issue (when compared to utilitarian and deontological approaches for example), and secondly, that the main parties involved (MNC accountants and regulators) are likely to agree with the main tenets of this approach. The paper also contributes by reconceptualising, using MacIntyre’s scheme, the issue of tax avoidance in relation to Donald Cressey’s ‘fraud triangle’.

Taxation in general and tax evasion in particular are inherently geographical in nature but only a small number of geographers have focused on them. In this progress report I present geographers' research on offshore financial centres alongside the work of researchers from other disciplines to present an overview of what we know about the geographies of tax evasion and avoidance. It is argued that not only much regulatory work but also much research remains to be done on tax havens.
Keywords: offshore financial centre, taxation, tax avoidance, tax evasion, tax haven, economic geography, political geography

Los precios de transferencia suelen ser definidos como “los precios a los que se realizan transacciones entre entidades vinculadas”; aunque, esta definición implica reconocer la existencia de un “precio”, de un contrato entre partes jurídicamente independiente, algo que no se cumple hacia el interior de un grupo económico. Su importancia fiscal radica en que la valoración de estas operaciones tiene un impacto en los balances y estados de resultados de cada entidad del grupo, y por lo tanto los grupos económicos, con el objetivo de incrementar sus ganancias globales, utilizan los mecanismos de precios de transferencia para aumentar los costos en las jurisdicciones de alta tributación y transferir las utilidades a las casas matrices, muchas veces por vía de “guaridas fiscales”, que no solo son importantes por sus bajas o nulas tasas imponibles, sino también por el elevado nivel de “secretismo” con el que protegen a sus inversores. Estos mecanismos distorsionan completamente las motivaciones económicas, al punto que termina remunerándose, como consecuencia de las legislaciones vigentes en todo el mundo, no tanto a quién produce cada cosa, o al valor agregado por cada entidad del grupo –algo difícil de calcular cuando los precios han sufrido distorsiones-, sino a la empresa del grupo que registra a su nombre los activos, funciones y riesgos.

Based on primary research in company accounts and fieldwork in Ghana, this report set out how one company used intercompany transfer pricing transactions to shift taxable profits out of Ghana and into low-tax jurisdictions. It was the first such case study to focus on a developing country, and became a reference work in the debate on taxation in developing countries, not least among African policymakers.

This paper discusses differences between concepts of tax avoidance, tax evasion, aggressive tax planning and tax mitigation. Also, relationships between concepts of tax avoidance and tax abuse, and concepts of tax evasion and tax fraud are provided. At the end of the paper, a comprehensive scheme shows the most significant features of concepts in question which allows easily to draw borderlines between these concepts.

There is growing attention on the question of tax treaties signed by developing countries. To investigate this apparent shift in opinion among policymakers, and to see what lessons can be drawn by other developing countries, Tax Justice Network Africa (TJN-A) commissioned this study of current policy towards tax treaties in Uganda and Zambia, two countries that appear to be questioning past decisions.