Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts
By Derek Hunter

A sign of how dire the Greek debt crisis has become is its most recent debt reduction measure -- tax spies. Worthy citizens and tourists alike will be recruited to engage in clandestine collection, and these masters of economic espionage will then pose as customers at suspicious stores. While Greece’s latest attempt to address its revenue shortfalls might seem humorous, the country’s financial condition is not. As the New York Times reports, a third bailout is all but a certainty if Greece is going to avoid default, and Greece will need more than amateur tax spies if it wants countries like Germany to accommodation a debt restructuring.
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March 20, 2015
By Derek Hunter

President Obama’s 2016 budget includes a one-time 14% tax on approximately $2 trillion of so-called unrepatriated (or “trapped”) foreign earnings of large multinational corporations. The proposal also includes a 19% tax on future foreign earnings, with a sizable credit for foreign taxes paid, which will allow those earnings to then be brought back to the United States with no additional tax due. The importance of this proposal really cannot be overstated: TARP and the Obama Stimulus of 2009 combined amounted to $1.2 trillion, less than eligible U.S. corporate unrepatriated earnings under this plan.

Check out the New York Times take on the Obama proposal.
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February 12, 2015
By Evan Abrams

The European Court of Justice has ruled that Spain may not charge a higher inheritance tax to non-residents. The country had been operating under a bifurcated system where a variety of exemptions available only to Spanish residents left a yawning gap in the effective tax rate. The court explained that such a system undermines the spirit and goals of an economically integrated European Union. The Telegraph reports that foreign residents will be able to apply for a reimbursement, but notes they may have to wrangle with the Spanish government before they actually receive a payment.
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October 03, 2014
 By Derek Hunter

The home of the Whopper is moving to Canada, but the Miami-based corporation that brought you such savory selections as the chicken fries (which is back by “popular” demand) did not decide to relocate for the weather and the Mounties. Instead, Burger King is pursuing a tax inversion, a process by which a domestic company merges with a foreign corporation to relocate abroad and take advantage of the foreign country’s lower corporate tax rate. Burger King is eloping with Canada’s donut and coffee shop of choice, Tim Horton’s, and the new combined entity will only face a 26% corporate tax rate in Canada, as compared to 35% in the U.S.

While President Obama has dubbed Burger King, and other inversion offenders, as “unpatriotic”, Bloomberg Business week discusses the tax inversion’s growing popularity with companies in many different industries.
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September 23, 2014
By Sam Obenhaus

Senators Carl Levin (D-MI) and John McCain (R-AZ) are seeking the extradition of 60 Swiss bankers and financial advisers who allegedly assisted U.S. citizens in evading taxes.  On March 18, they sent a letter to Assistant Attorney General James Cole pushing the Department to request extradition, something it has been reluctant to do.  

“Even if a request is unsuccessful,” they claim, “it will inform both Switzerland and its citizens that the United States is ready to make full use of available legal tools to stop facilitation of U.S. tax evasion and hold alleged wrongdoers accountable.”  

Levin and McCain are Chairman and Ranking Member, respectively, of the Senate’s Permanent Select Committee on Investigations. The Washington Post and Wall Street Journal have more on this story. 
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March 24, 2014
By Sam Obenhaus

Does Americans’ right to privacy extend far enough to protect their hidden foreign bank accounts?  Will a law requiring foreign financial entities to disclose information on all American account holders lead those institutions stop doing business with Americans?  The Republican National Committee (RNC) says yes and voted to repeal the Foreign Account Tax Compliance Act (FATCA) at its winter meeting.

The Act was passed in 2010 but goes into effect this July.  Its principle objective is to make it harder for U.S. citizens – primarily those living within the U.S. – to evade taxes by stashing money in offshore accounts.  However, banks, libertarians, and non-resident U.S. citizens, among others, are all opposed to a law that some call “overzealous.”

The heart of the conflict, the burden on U.S. citizens living abroad, comes about because of the U.S.’s unique extraterritorial taxation system.  Unlike all other developed nations, the U.S. taxes its citizens living in foreign countries.  One legitimate concern is that these Americans will find it harder to find a local bank willing to deal with them because of the increased regulatory burdens imposed by FATCA.

Undeterred, the U.S. government is forging ahead and recently signed an intergovernmental agreement with Canada to facilitate the sharing of bank account information.  This is the 22nd such agreement.

You can see the RNC resolution here and an article about their vote over at Reuters.  Bloomberg BNA has an article on the U.S.-Canadian agreement.
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February 20, 2014
By Sam Obenhaus

Senate Finance Committee Chairman Max Baucus (D-MT) is pushing forward with tax reform.  On November 19, he released a draft bill that proposes changes to the way the IRS taxes foreign earnings of U.S. corporations.

Under current law, the U.S. operates a modified residential taxation system that stands in contrast to the territorial system used by most other countries.  Under the U.S. system, U.S. multinational firms must pay U.S. taxes on income earned abroad with a few exceptions.  Most importantly, deferral provisions in the U.S. tax code allows companies to avoid paying U.S. taxes on foreign income until they decide to repatriate that money back to the U.S.  This, of course, creates a disincentive to bring money back to the U.S.

Baucus’s draft addresses a few of these issues while maintaining the U.S.’s rather unique worldwide taxation regime.  Instead of moving to a territorial system, Baucus proposes to do away with deferral.  His plan calls for immediately imposing a tax on U.S. firms’ foreign earnings but at a lower statutory rate.  It would also limit some of the mechanisms U.S. corporations use to shift income-generating assets from the U.S. to low-tax jurisdictions abroad.

The proposal has been met with mixed a mixed reception.  Some businesses, especially those without significant international operations, came out in support of the proposal.  U.S. multinationals were less enthused.  And at least one Senate Finance Committee Republican, Sen. Rob Portman (R-OH), did not reserve judgment.  “I fear that if we have a minimum tax under a worldwide system, it will encourage more U.S. companies to incorporate overseas,” he said.

For more on this story visit the Wall Street Journal and Bloomberg BNA’s International Tax Monitor.
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November 27, 2013
By Aliza Kempner

Attention Coca-Cola fans, the beloved recipe might be changing for those of you in Mexico. While the top-selling soda giant switched out cane sugar in its recipes for corn syrup in the United States in the '80s, the Mexican version of the recipe has stuck with cane sugar. 

Arca, Coke’s Mexican bottler, has concerns about the elasticity of demand for its original beverage in light of new soda taxes and may shift to lower cost ingredients. Read on to see what Forbes has to say about the circumstances surrounding this potential change.
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November 16, 2013
By Sam Obenhaus

The European Union’s plan to implement a harmonized financial transaction tax (FTT) likely violates customary international law, according to an E.U. Council legal service memorandum obtained by the Financial Times.  The non-binding opinion finds FTT “exceeds member states’ jurisdiction” by taxing covered transactions made by E.U.-headquartered companies and their counterparties regardless of where the trades were executed.  As a result, trades made outside E.U. jurisdiction, including New York, would be subject to the tax.  The proposal, which is designed to reduce tax avoidance, is still supported by the E.U. Tax Commissioner, Algirdas Semeta, who continues to defend FTT’s legality.

Read more on this story at the Financial Times.
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September 14, 2013
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