Overview of International Tax Planning

Transcription

1 Overview of International Tax Planning Belema R. Obuoforibo CTA ATT(Fellow) Director, IBFD Knowledge Centre The Netherlands Livingstone, 18 June 2015 IBFD

2 IBFD IBFD: mission and purpose IBFD in Africa The IBFD Knowledge Centre The changing landscape of international tax: IBFD as witness, reporter, and impartial guide IBFD

3 Scope Overview of international tax planning The journey thus far the world in context Signposts along the way schemes, broadly The keeper at the gate targeting tax avoidance Whither henceforth? where now from here? IBFD

4 The journey thus far The world in context International tax planning: the changing landscape Proliferation of tax planning schemes IBFD

5 Laws have generally not kept pace! IBFD The journey thus far Reasons: Globalisation The rise of the digital economy Fluid movement of capital Growth in Intellectual Property Growth in the financial services industry Harmonisation of legislation across key blocs Extension of tax treaty networks

6 Signposts along the way Schemes, generally: Treaty shopping - inadequate safeguards (LOB, anti-abuse clauses, etc) Permanent Establishment - avoidance of PE status - e-commerce and nexus IBFD

7 Signposts along the way Schemes, generally (2): Intellectual Property Competition between nations Tax incentives (input and output) IP Box Regimes specifically Accelerated deductions The Nexus Problem IBFD

8 Signposts along the way Schemes, generally (3): Hybrid Instruments Growth of the financial services industry Sophisticated instruments neither fish nor fowl Unsophisticated domestic laws Main benefit: deduction without taxable receipt IBFD

9 Signposts along the way Schemes, generally (4): Hybrid Entities Tax arbitrage based on difference in national rules Rise in global trade more widespread Actively encouraged by legislation in some countries (e.g. US check-the-box, Netherlands CV-BV structures) IBFD

10 Signposts along the way Schemes, generally (5): Holding companies in particular jurisdictions Assisted by wide treaty network and/or EU law Special holding company jurisdictions (eg ETVE in Spain) Low tax rates income and capital gains Substance requirement issues abound Increasingly not tax havens (e.g. the Netherlands, Ireland, and even the United Kingdom) IBFD

11 Signposts along the way Schemes, generally (6): Transfer Pricing Transactions between associated enterprises Business restructuring issues Debt restructuring Thinly-capitalised entities Excessive interest deductions Transactions involving disguised interest IBFD

12 Signposts along the way Schemes, generally (7): Low-Tax Jurisdictions and Harmful Tax Practices Plain to see and censure Primarolo Group and harmful tax practices Entire jurisdictions (Isle of Man, Jersey, Guernsey, etc) Particular companies or sectors (e.g. IBC, IFSC, Luxembourg 1929 Company) Phased out, but end of story? Mainstream jurisdictions may offer more! IBFD

13 The Keeper at the Gate Targeting Tax Avoidance: Action by Governments, EU, OECD Growth in volume of anti-avoidance legislation GAARs and SAARs Agreements for Exchange of Information Rubik agreements and amnesties IBFD

14 The Keeper at the Gate Targeting Tax Avoidance (2): GAARs Becoming more popular Consider India and the United Kingdom GAARs in tax treaties IBFD

15 The Keeper at the Gate Targeting Tax Avoidance (3): Noteworthy SAARs Tax arbitrage (anti-hybrid) rules Rules limiting deduction of interest (e.g. UK, Germany) Controlled Foreign Company (CFC) legislation Rules to catch artificially diverted profits (e.g. UK Diverted Profits Tax ) Rules re residence (e.g. Ireland s rules re stateless companies ) IBFD

16 The Keeper at the Gate Targeting Tax Avoidance (4): Other measures Termination (and possible renegotiation) of tax treaties (e.g. Mongolia) Rules requiring provision of information (DOTAS and FATCA) Rules targeting bank secrecy Intergovernmental cooperation (e.g. mutual assistance measures) BEPS No laws yet! IBFD

17 Where now from here? Open to discussion. But worth considering: Measures not coordinated at international level Competitiveness vs Increased Tax Revenue: the tension at the heart of policy making The complexities of anti-avoidance rules No One-Size-Fits-All solution: differing considerations between developed and developing countries, and within each group IBFD

18 Thank you IBFD