Aggressive tax planning pdf

Next, the paper discusses the problem of aggressive tax planning, including its mechanics, effects, the role of governments, and regulatory frameworks and initiatives in this area. Aggressive tax planning and the social responsibility of. Chapter 2 international double taxation, tax evasion and. Introduction th is research was undertaken to inform new zealand inland revenues current and future initiatives aimed at reducing aggressive tax planning atp. This report, which deals with aggressive tax planning involving corporate losses, has been prepared jointly by the forum on tax administration fta and the aggressive tax planning atp steering. For the ato, aggressive tax planning is the point where tax planning goes beyond the policy intent of the law. Corporate loss utilisation through aggressive tax planning corporate losses raise compliance risks if aggressive tax planning is used as a means of increasing or accelerating tax relief in ways not intended by the legislator, or to generate artificial losses. Normal tax planning means using established procedures to reduce the tax burden when it becomes aggressive, every possible loophole or clause that can be interpreted to be used in a way to save on tax is used. Tax abuse and aggressive tax planning in the beps era. The ita contains provisions intended to limit overly aggressive tax plans and the canada revenue.

Corporate loss utilisation through aggressive tax planning. Corporate social responsibility, taxation and aggressive. Victor jaramillo coauthored the article combating aggressive tax planning through disclosure. The authors employ ols regression as the baseline methodology, and. The australian taxation offices management of aggressive. It is pertinent that policymakers and tax authorities to take. The european commissions new proposals against antitax avoidance and aggressive tax planning. How eu law and the oecd are establishing a unifying conceptual framework in.

There have been increasing literature on aggressive tax planning and corporate tax avoidance, which focus on economic consequences ksovreli, 2015. Pdf is aggressive tax planning socially irresponsible. Curbing aggressive tax planning european commission. United kingdom disclosure rules study by the research chair in taxation and public finance, university of sherbrooke, july 2009. Aggressive tax planning based on after tax hedging aggressive tax planning based on after tax hedging aggressive tax planning atp schemes based on after tax hedging pose a threat to countries revenue base. Beps actions implementation by country action 12 disclosure of aggressive tax planning on 5 october 2015, the g20oecd published final reports and an explanatory statement outlining consensus actions under the base erosion and profit shifting beps project. The oecd provides a forum for countries to exchange information on tax planning schemes, detection methods and response strategies. Demand for aggressive tax planning1 peter bickers, tracey lloyd, bhaskaran nair, and michael slyuzberg, inland revenue, new zealand 1.

Aggressive tax planning poses a risk to a significant amount of revenue and it can affect community confidence in the tax system. International double taxation, tax evasion and aggressive tax planning international double taxation, excess taxation, tax avoidance, tax evasion and aggressive tax planning are all related problems162 and can cease to exist, in the authors opinion, only when a country is able to provide much better. The public and media debate whether such aggressive behaviour is immoral. Corporate tax avoidance the problem of aggressive tax. Aggressive tax planning and corporate tax avoidance. Mergers and acquisitions of croatian target companies may involve significant tax risks for domestic and foreign acquirers. Pdf taxrelated risks of mergers and acquisitions in. While, at a technical level, aggressive tax planning covers both tax avoidance and tax evasion, the focus of this paper is limited to situations of tax avoidance. Impact of tax reform on planning toolkit the american taxpayer relief act of 2012 atra and net investment income tax niit have added more complexity to planning given that you now have to navigate through a multilayer tax system in conjunction with running multiyear scenarios to gain a clear picture of the tax landscape in order to advise your clients on virtually all of their personal. Aggressive tax planning atp is about following the letter of the law but not its spirit generally reducing income or inflating expenses often involves contrived arrangements for little economic sense tax administrations all over the world are working to respond to atp. The ato considers aggressive tax planning to be a priority corporate risk. The ibracoperemba case the taxpayer in this case, a property developer, purchased land in 1992.

It could be argued that labelling certain forms of base erosion and profit shifting as aggressive tax planning is misleading, for example when the base erosion is knowingly facilitated by the law of the state the base of which is being eroded. Aggressive tax planning challenge of the digital era. We are allowed to arrange our affairs to minimize our. The atp expert group is a subgroup of working party no. Managers of multinational companies often favour an aggressive tax avoidance strategy that pushes the legal limits onto the advantage of shareholders and the disadvantage of the spirit of democratically legitimized tax laws. Aggressive tax planning can take a multitude of forms. Page 4 of 5 the fact that an exemption may be claimed in an unforeseen or novel manner, as may have occurred in this case, does not necessarily mean that the claim is a misuse of the exemption. Beps actions implementation by country disclosure of. Aggressive tax planning exploits the differences in tax systems. The study established that aggressive tax planning such as thin capitalization, tax law incentives and other benefits of loopholes in nigerian tax laws have not been fully utilized by the nigerian. Aggressive tax planning based on aftertax hedging aggressive tax planning based on aftertax hedging aggressive tax planning atp schemes based on aftertax hedging pose a threat to countries revenue base. The aim of this study is to provide economic evidence of the relevance of aggressive tax planning atp structures for all eu member states.

Intermediaries and disincentives for aggressive tax planning. Of tax planning, avoidance and perils when you falter 2 an overview of the income tax apa rules 2012 pwc alert issue 95, may 2012 2 tax avoidance pwc alert issue 116, october 2014. Aggressive tax avoidance is a subset of the aggressive legal interpretations potentially. Aggressive tax planning and corporate social responsibility in israel moran harari, ofer sitbon, ronit donyetskedar table of contents introduction 1. The european commissions new proposals against antitax. Impact of digitalisation on international tax matters, european parliament, directorategeneral for internal policies, policy department a economic, scientific and quality of life policies, 15 february 2019. First, we note that there are frequent references to tax evasion in the consultation. How aggressive tax planning facilitates the diversion of. The mechanics of stateless income tax planning include earnings stripping, particularly aided by the checkthebox regime, transfer pricing with an emphasis on abuses in cost sharing arrangements, aggressive contractual terms in transfer pricing and legal system arbitrage, etc. Consequently, the expression aggressive tax planning or atp is to be. Atp includes exploiting loopholes in a tax system and mismatches between tax systems. Base erosion and profit shifting has been described in the.

Taxation papers aggressive tax working paper no 71. World tax journal february 2017 49 tax abuse and aggressive tax planning in the beps era. To view the article in its entirety, please click on the above link. Multinational companies may for example use holding companies or conduit companies to take advantage of a country tax treaty network or to take advantage of low tax jurisdictions to reduce their tax liability. In some subchapters case study method is also applied particularly when describing double irish dutch sandwich and itax examples of tax planning exploring reasons and solutions in analytical ways. It may also lead to double non taxation or double deductions. Intermediaries and disincentives for aggressive tax planning pwc international ltd pwc, on behalf of the pwc network, welcomes the opportunity to respond to the european commissions open public consultation disincentives for advisors and intermediaries. Tax evasion is materially different from tax avoidanceaggressive planning however that is defined and is a criminal activity. Aggressive tax planning indicators final report issn 17257565 pdf issn 17257557 printed taxation papers are written by the staff of the european commission s directorategeneral for taxation and customs union, or by experts working in association with them. Aggressive tax avoidance by managers of multinational. Finally, the paper answers the question whether there is a corporate fiduciary duty.

Demand for aggressive tax planning internal revenue service. Tax planning is the process of structuring ones affairs in order to defer, reduce or even eliminate the amount of tax payable to the government. Over the recent years, croatian tax authorities have started to vigorously assess the economic substance of the envisaged. Taxation papers aggressive tax working paper no 71 2017. Corporate social responsibility, taxation and aggressive tax planning article pdf available in nordic tax journal 20141 may 2014 with 2,677 reads how we measure reads.

Combating aggressive tax planning through disclosure. Kpmg position paper on the european commissions public. Base erosion and profit shifting beps refers to tax planning strategies that exploit gaps in the architecture of the international tax system to artificially shift profits to places where there is little or no economic activity or taxation. Irma johanna mosquera valderrama1, festus akunobera2. What canada can learn from other jurisdictions, instalment 4. Tax is a question of law and its the governments job to decide what legal tax planning arrangements it wishes to prevent. The cfa has invited working party 11 aggressive tax planning.

The scope for tax avoidance is increased by extremely complex tax systems that unintentionally create legal loopholes and potential anomalies in the tax law. Aggressive tax planning atp consists in taxpayers reducing their tax liability through arrangements that may be legal but are in contradiction with the intent of the law. In this article, the link between corporate social responsibility csr and aggressive tax planning was considered, in the backdrop of recent parliamentary hearings and investigations over the aggressive tax planning of multinationals. Aggressive tax planning can be characterized, for instance, by an intensive use of legal and financial tools, establishments in foreign tax havens, unbalanced capital structures and transfer. We are allowed to arrange our affairs to minimize our income taxes as long as it is done in accordance with the provisions of the income tax act ita. The study relies on economic indicators available at macrolevel and on indicators derived from firmlevel data. Aggressive tax planning and stock price synchronicity. The existence of withholding taxes prevents shifting profits taxfree toward noneu country jurisdictions, and therefore discourages or impedes aggressive tax planning, even though it can lead. How eu law and the oecd are establishing a unifying conceptual framework in international tax law, despite linguistic. The purpose of this paper is to investigate the association between aggressive tax planning and stock price synchronicity.