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CAPITAL MOBILITY, FINANCIAL CRISIS, AND TAX COMPETITION

CAPITAL MOBILITY, FINANCIAL CRISIS, AND TAX COMPETITION. Dr João Dácio Rolim (LLM-LSE, PhD QMUL, Tax Lecturer FGV) IBDT Faculty of Law USP 22/08/2011. Tax and Competitiveness. I - The Global Competitiveness Report 2011(world economic forum )

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CAPITAL MOBILITY, FINANCIAL CRISIS, AND TAX COMPETITION

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  1. CAPITAL MOBILITY, FINANCIAL CRISIS, AND TAX COMPETITION Dr João Dácio Rolim (LLM-LSE, PhD QMUL, TaxLecturer FGV) IBDTFacultyof Law USP22/08/2011

  2. TaxandCompetitiveness I -The Global CompetitivenessReport 2011(world economicforum) *Brazil 58th, buteffectoftaxation (139, lastrank) and total tax rate (127). II -Paying taxes report 2011 (pwc/world bank/IFC) *Brazil: easeofpaying (152), time t comply (183, last) and total tax rate (168, 68%).

  3. Correlation country sizeandtax rates - OECD

  4. Tax Competition I - OECD (1998/Jan Report) *Equitable allocation of tax revenues *Fair allocation of tax base *Harmful tax practices - 2000 The Global Forum on Transparency and Exchange of Information for Tax Purposes - G20 London meeting 02/04/2009 (transparency and exchange of information)

  5. Tax competition II – United Nations *Global taxes and international tax organization x fiscal sovereignty and tax competition (Zedillo Report/2001) *Declaration on Financing for Development (Doha, 2008, Dec): modern tax systems, more efficient tax collection, tax base and effectively combat tax evasion.

  6. Tax Competition III WTO *Trade neutral allocation of tax revenues *Non-protectionism/non-discrimination *no subsidies to exports (abuse of rights, good faith, neutrality, tax avoidance)

  7. Tax competition IV European Union *Code of Conduct (1997/Dec) *State Aid restrictions (EU Treaty) *Good Governance in Tax (Ecofin, 14/05/2008), principles of transparency, exchange of information and fair tax competition *Balanced allocation of taxing powers *Fundamental freedoms (single market) x fiscal sovereignty (direct taxation)

  8. Tax competition V - ECHR *Fiscal sovereignty of States x fundamental rights *Right to freedom of movement (tax residence): reasonable restrictions allowed in the public interest * Right to non-discrimination (non nationals)

  9. Statutory tax rates, 1985–2009

  10. Tax measures taken by EU-27 Member States TAXES LOWER TAXES HIGHER Personal Income Tax: OE, DK, FI, FR, DE, HU, LV, EL, IE, UK LT, LU, MT, NL, PL, PT, SI, SK, SE CIT rate: EL, LU, PT, SE IT, LT (allowances):FR,LT, PL, PT, SI, SK OE, BG, ES, IT, NL, DE, VAT Standard Rate UK HU, IE, LV, LT Reduced Rates BE, CY, CZ, FI, FR, MT, RO HU, EE, IE, LV, LT Source: adapted from European Commission (2009c).

  11. Tax systems, financial crunch and tax competition • Worldwide basis to territoriality? • Capital Export Neutrality (credit) • Capital Import Neutrality (exemption) • More protectionism? WTO G-20

  12. Tax systems, financial crunch and tax competition Source v Residence (benefit x ability to pay) fairer allocation of tax jurisdiction Fiscal incentives (FDI and domestic incentives) more transparency (exchange of information and enforcement) Social redistribution (global tax?)

  13. THE END OF THE FINANCIAL CRISIS AND TAX COMPETITION?

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