1 / 18

Tax Avoidance in a global economy

Tax Avoidance in a global economy. Mark Nieuweboer (Institute for Taxation and Economics). 2.5%. Subjects. Fragmentation and globalisation Aggressive tax planning The case against tax avoidance. The law applies equally for all. Tax system Resistance against paying taxes Free riders

amiel
Télécharger la présentation

Tax Avoidance in a global economy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Tax Avoidance in a global economy Mark Nieuweboer (Institute for Taxation and Economics)

  2. 2.5%

  3. Subjects • Fragmentation and globalisation • Aggressive tax planning • The case against tax avoidance

  4. The law applies equally for all • Tax system • Resistance against paying taxes • Free riders • If the law applies equally to all, how can one taxpayer legally pay less than the other?

  5. Fragmentation leads to arbitration • Fragmentation • State • Taxpayer • Income • Time • Arbitration

  6. Case study: United States v Isham (1873)

  7. Globalisation • World trade agreements • Liberalisation of capital markets and the euro • Information & communication • Technology

  8. Tax avoidance is profitable • Competition between states • Competition between companies • Tax systems have not globalized

  9. Base Erosion and Profit Shifting • Disconnect real activities from reported income • Global value chain • Drain profits through funding • Profit repatriation schemes

  10. Connection between profits and activities • Global Value Chain • Transfer pricing • Functions, risks & assets used • Disproportional value for intangibles and risks?

  11. Case study: quality coffee or high value brand?

  12. Drain profit through debt funding • Interest charge is tax deductible • Interest income is highly mobile • Instruments:- • Base companies in ‘real’ tax havens • Conduit companies • Hybrid mismatches

  13. Profit repatriation schemes • Prevent ‘leakage’ of profits • Instruments:- • Defer distribution of income () • Hybrid mismatches • Conduit companies

  14. Tax avoidance is bad, because it… • drains the public budget • frustrates economic policy • distorts competition • is unfair and creates inequality • is economically inefficient • does not contribute to good citizenship • is not transparant • is not democratically legitimized

  15. Tax avoidance is not bad, because it… • has minimal effect on budget • allows for fiscal price differentiation • makes tax competition between states less harmful • facilitates foreign direct investments • protects the tax revenues • protects smaller economies • requires less government resources

  16. Economic effects of anti-avoidance policy • Increase in tax revenue • Incidence of corporate income tax • Capital outflow • Elimination of means does not eliminate the needs • Decrease welfare

  17. What can we do? • Undo globalisation • Change the corporate tax paradigm • Eliminate the differences between all tax systems through harmonization • Coordinated anti-avoidance rules • Uniliateral anti-avoidance rules • Nothing…

  18. Adam Smith, Wealth of Nations (1776) “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

More Related