Tuesday, May 28, 2013

Apple's simple design interface most certainly does not extend to its tax department.

Lee Sheppard has an article today on Apple's tax tricks [gated] where she works through Apple's multinational structure & planning detailes as outlined in the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI) report. You should read the whole article, but here are some of its key concepts:
We're ... not easily shocked by transfer pricing practices that the U.S. government accepts, for better or worse. ...But Apple's planning ... is a special case . We're talking gross worldwide revenues the size of the California state budget, and no tax being paid anywhere on a huge chunk of profits. What is truly surprising about the Apple case is its brazenness. PSI concluded that Apple's self-serving intercompany contracts had no effect on its business practices.
...Nearly two-thirds of Apple's revenue comes from foreign sales. According to the PSI report, this foreign income is routed through Ireland and may be taxed nowhere, not even in Ireland. ... 
Apple Operations International (AOI), Apple's Irish-registered holding company, acts as an internal finance company. ... AOI claims tax residence nowhere.
Apple Sales International (ASI), an Irish principal company that manages Apple's supply chain and sales to Europe and Asia, is a subsidiary of Apple Operations Europe (AOE), which is a subsidiary of AOI and has employees and operations. ASI has 250 employees and deals with Apple's third-party Chinese manufacturers. 
ASI claims no tax residence anywhere ... [emphases added].
When I heard these statements--more than once--in the hearings, I wondered why on earth the Senator who was asking at the questions at the time didn't stop right there and say hold on, are you telling us that these companies exist, we are supposed to treat each as a separate taxpayer and respect its independence from the parent company for tax purposes, and accept at the same time that each resides for tax purposes in no country anywhere?

Let's be clear: humans never get away with these kinds of arguments. You might be resident in many places but I think it is very hard to claim that you are resident nowhere--governments always seem to find some reason and some way to claim you. But somehow the Senator didn't challenge this troubling statement.

If the challenge had come, we might have heard a not-so-simple design explanation from Apple, such as that the subsidiaries are incorporated in Ireland, which would make them Irish residents for US tax purposes, but for Irish tax purposes each is resident in Bermuda, while for Bermuda purposes each is resident in Ireland or at least not resident in Bermuda; either way, certainly neither is resident in the United States even though both are clearly controlled from California.

Simple, clean, one button design interface Apple's corporate structure is not.  Funny how Steve Jobs' vision was, and now Tim Cook's vision is, so different for the tax department. Yet this basic structure is, I must hasten to repeat, perfectly, unequivocally legal, understood and accepted and in many ways even facilitated by governments all over the world including and perhaps especially the United States with its deferral regime.  But that doesn't mean the whole structure is similarly straightforward from a legal compliance perspective. More from Lee:
Apple conducts all of its research and development in the United States. Apple Inc., the U.S. parent, has a cost-sharing agreement with AOE and ASI, which pay 60 percent of the cost of this research. Apple's intellectual property is in the United States with the U.S. parent, Apple Inc. Apple told PSI that it divides R&D costs according to worldwide sales revenues.
This arrangement, Lee tells us, dates back to a more permissive time in cost sharing regulatory history and would probably be protected from today's more stringent requirements. Lee observes:
...AOI has no employees; its American board members, who are Apple executives, hold their meetings in California, often without the participation of the lone Irish director. Apple's tax director told PSI that he believed AOI is not managed and controlled in Ireland. Apple told PSI that AOI has not paid income tax to any government for the past five years.
...Ireland takes the position that it is a legitimate low-tax country that only permits the 12.5 percent rate for income from trade, an ancient English concept that appears to require a ruling. Yet Apple told PSI that Ireland permitted an income calculation that enabled Apple subsidiaries to pay Irish corporate income tax at a rate of 2 percent or less. 
Lee wonders if this puts Ireland in a troublesome place vis a vis EU law which prohibits burying state aid within generally applicable tax laws, especially since Ireland is already getting some heat for changing its laws "to accommodate the numerous U.S. multinationals that use it to shelter European sales income." She then works through US domestic tax law and the US-Ireland treaty to show that AOI could very well be viewed as being taxable in the US, yet its income probably wouldn't be subject to tax in any event given the rather complex, internally inconsistent, but overall taxpayer friendly rules of subpart F and its ancillaries.

All in all Lee runs through of some of the more arcane complexities of the US international tax rules in this article, and makes a pretty persuasive case for viewing the system as hopelessly absurd in the extreme.  Tim Cook says he wants to change that, that he's all for a simpler, cleaner interface for the tax code. But remember that very often when someone says they want simplicity, what they really just want is to be able to pay (even) less tax.

Saturday, May 25, 2013

New Book: Looking through the Corporate Structure

Since the introduction of the term “beneficial owner” to the OECD Model Tax Convention in 1977, courts and the OECD have struggled to interpret the term, and to use it as a test for deciding conduit company cases. 
If applied in a formal legalistic sense, the beneficial ownership test has no effect on conduit companies because companies are legal persons that, in law, own both their assets and their income beneficially. By contrast, in a substantive sense, a company can never own anything because economically a company is no more than a matrix of arrangements that represents individuals who act through it.
Faced with these opposing considerations, courts and the OECD have adopted surrogate tests for the beneficial ownership test. These tests, however, were originally meant to counter different kinds of tax planning strategies. They did not indicate the presence of beneficial ownership. Therefore, they are inappropriate for determining the correct tax treatment of passive income derived by conduit companies. 
This book examines the conflict between the general policy of double tax treaties embodied in the beneficial ownership requirement and the concept of corporations. The work highlights the shortcomings of surrogate tests with the help of analyses of reported conduit company cases. It offers an alternative approach for interpreting and applying the beneficial ownership test. It contains a critique of the work of the OECD Committee on Fiscal Affairs before the insertion of the term, and suggests appropriate amendments to relevant parts of the official Commentary on the OECD Model Tax Convention.

John Prebble alerted me to this book and he says:
The book is particularly timely because it addresses one of  the principal means by which multinational companies siphon profits to low-tax jurisdictions. One apparently obvious way to address the conduit company problem is for states to re-draft and to renegotiate their tax treaties. But that is easier said than done, and usually very time-consuming.
Until there can be wholesale re-drafting of treaties, the book argues persuasively that within current legal frameworks it is not only possible but legally correct for tax administrations and courts to interpret beneficial ownership provisions in tax treaties purposively. The result would be to thwart the use of stepping-stone strategies that shift profits from high-tax countries in Europe, Asia, and the Americas to low-tax jurisdictions.
The book adopts a comparative approach, analysing reported cases from a number of jurisdictions, comparing judgments that have interpreted treaties purposively with formalistic reasoning that creates loopholes that states never intended.
I agree, this is a particularly timely topic. It's technically and conceptually difficult, and it is difficult to solve as a matter of law as well.  The book is available at the link above, and at a 20% discount until May 31 using promotional code EBOT_2013.

EU Public Hearing on FATCA

Victoria Ferauge alerted me to the EU public hearing on FATCA coming up this Tuesday, 28 May from 3:30-5pm (Central European Std Time), which is 9:30 am Eastern Standard.  Victoria says:

Given my experience with the OECD, I wanted to be very sure this time around that "public" meant real people could attend. So I sent an email to MEP Sophie in't Veld (many thanks to Mark who passed along her email address).  This was her answer:
Dear Mrs Ferauge,
Thank you for your message. The meetings are public, so you can attend freely. The meeting will also be webstreamed via http://www.europarl.europa.eu/ep-live/en/committees/
With kind regards,
Sophie in 't Veld, MEP
It will be interesting to see how this goes and I very much look forward to Victoria's impressions.  By now FATCA's reach is beginning to be understood by a broader audience, but much (well-founded) fear and confusion remains due to the conflation of tax cheats hiding cash in complicated offshore schemes with Americans living abroad who are just trying to live their lives. I do hope that this public meeting will help clarify things.

Friday, May 24, 2013

Tax Justice Roundtable & Research Symposium--McGill Faculty of Law

Next week the McGill Faculty of Law will be hosting a roundtable and research symposium on Tax Justice.

The roundtable will be held on Wednesday May 29 at 7:30 and will be preceded by a 5-7 cocktail, both at the McGill Faculty of Law.  John Christensen, James Henry, Diana Gibson, and Frédéric Zalac will each present their ideas on what it means to talk about justice in taxation. The roundtable is free, open to the public, and will be live webcast here.

The research symposium will be held the following day, Thursday, May 30, beginning at 9:30 am at the McGill Faculty of Law. The idea of the symposium is to bring together academics, researchers, and other interested parties to talk about what research has been done, is currently being done, and needs to be done in order to further the cause of seeking justice in taxation.  You can view the preliminary program here. All are welcome, registration is required.

More info at the links above.

Tuesday, May 21, 2013

Employee Mobility & Assignments Abroad-Conference at McGill Law-May 29

The Canadian Tax Foundation will host a conference at McGIll Law next Wednesday on the (timely!) topic of taxing workers when they go abroad. Eminent McGill law grad and former McGill chancellor Richard Pound will deliver the lunchtime address. Info below and on the CTF website.

Employee Mobility - Assignments Abroad 
Wednesday, May 29, 2013 
8:45 a.m.  –  4:45 p.m.
Followed by a cocktail reception sponsored by Stikeman Elliott 
McGill University, Faculty of Law
3660 Peel Street (library entrance)

This year, the theme for the Canadian Tax Foundation’s annual Journée d’études fiscales, is employee foreign assignments. Speakers at this conference will be discussing the various taxation considerations which arise, both from the perspective of the employee and of the employer, when Canadians choose to temporarily or permanently move their place of work abroad. Various aspects of taxation will be analyzed during the course of the day by experts in the field.

Click here for program & registration info.

After the cocktail, stick around for a Roundtable on Tax Justice, info here and more to come soon.

Opinion analysis--PPL Corp

My write-up of the PPL Corp decision handed down yesterday is now posted over at SCOTUSblog.

Apple in front of the Senate

Apple's on the hot seat and you can still catch it on C-SPAN or follow along with what's happened so far via the WSJ here.

US Supreme Court OKs UK windfall tax for credit: The PPL Case

The PPL decision was released yesterday and taxprof posted initial thoughts from Reuven Avi Yonah and myself. I'm not convinced as Prof. Avi-Yonah is that the decision is correct, but I am interested in a few of the interpretive advances presented in the case. My comments:

The Supreme Court unanimously decided in favor of the taxpayer with respect to the creditability of a foreign tax in PPL Corp & Subsidiaries v. Commissioner, released yesterday. In an opinion authored by Justice Thomas with a concurrence from Justice Sotomayor, the Court held that PPL Corp., a US company that owned a large interest in a UK energy company, is allowed to credit against its US income tax an amount paid as a “windfall tax” to the UK government in 1997. The ruling reverses the judgment of the Court of Appeals for the Third Circuit, siding instead with the Tax Court and the Court of Appeals for the Fifth Circuit in Entergy Corp. & Affiliated Subsidiaries v. Commissioner, 683 F. 3d 233.

 The case settles a circuit split but it leaves unresolved interpretive issues concerning Reg § 1.901-2(a)(1), which defines when a foreign tax is creditable for US purposes. The most discussed interpretive issue will likely be that involving the role of “outliers” in determining the predominant character of a tax, which Paul Clement focused on in his oral argument on behalf of PPL Corp. and which amici argued on both sides.

The outlier issue is fairly simple to understand but, despite receiving direct attention in the decision in this case, is perhaps not wholly resolved. The issue turns on what the regulations mean when they say that “a tax either is or is not an income tax, in its entirety, for all persons subject to the tax.” 

According to a tax professors’ amici brief led by Prof. Anne Alstott, this language means that no one taxpayer can be dismissed as an outlier: that a tax can only be an income tax if it acts as an income tax with respect to every taxpayer. But according to the taxpayer, and now according to the Supreme Court, some “outliers” can apparently be ignored so long as, for the most part, the tax acts like an income tax with respect to most taxpayers. At oral argument, Justice Kagan appeared to strongly disagree with this position, as discussed here, but she contributed no written opinion in the case. Justice Sotomayor also appeared disinclined to this position at oral argument, and her concurring opinion in the PPL decision leaves plenty of room for speculation as to how the Government might try to distinguish a future case from PPL.

 But even though it will likely be the most discussed feature of the case, the outlier issue is not the only interpretive gloss to emerge here. Justice Thomas also introduced a small but potentially interesting twist on the habitual presentation of the last clause of the “predominant character” rule; namely, the part that requires the foreign tax to be an income tax “in the US sense.”

Justice Thomas explains in the decision that this clause means that “foreign tax creditability depends on whether the tax, if enacted in the US, would be an income, war profits, or excess profits tax” [emphasis added]. These italicized words present what might be viewed as a hardly noteworthy deviation from past jurisprudence, which generally seems to simply repeat verbatim the regulatory language before going on to discuss the longstanding doctrine starting with Biddle v. Commissioner, as Justice Thomas does in the present decision.

Thus, it is quite possible that the slight reworking of the language is completely immaterial. One could well argue that there is no meaningful difference between a tax that is an income tax “in the US sense” and one that would be an income tax “if enacted in the US.” But we in tax know how much can turn on a single word in a statute or a regulation, and even in a single punctuation mark. Perhaps it does not strain credulity too much to take this new language seriously as a gloss, and query what it might mean.

 Justice Thomas looks at the tax in question and effectively asks, would it look like an income tax if it were enacted in the US? It is not too far of a leap to go from asking that question to asking whether, if Congress enacted a tax like this, it could survive constitutional challenge as an allowable tax under the 16th amendment, whether it is a direct tax or an indirect tax, and what the constitutional implications of that decision might turn on, and so on, down the rabbit hole of constitutional parameters and permissions on taxation in America. We can well imagine that many tax law professors and perhaps many practitioners as well could choose to have a lot of fun with the UK windfall tax if Congress tried to enact it as an income tax. Thus it is at least arguable that Justice Thomas’ suggestion that the tax would have to be an income tax if it were enacted in the US might ultimately prove to be a more, rather than less, strict analysis than that traditionally accorded to the “US sense” language.

Thus a small and perhaps insignificant interpretive step it may be, but fortunes have been made and lost on less distinction, as we in the tax community are all too aware.

I will have more extensive opinion recap on SCOTUSblog some time later in the day today.

Thursday, May 16, 2013

Model Charter of Taxpayer Rights

A consortium of tax advisors has prepared a "Model taxpayer charter to promote greater fairness in taxation across the world".  They have sent copies of this model charter to "Ministers and Deputy Ministers of Finance and Revenue of the countries who participated in the survey alongside the institutions of the European Union, the OECD, the United Nations Fiscal Affairs Committee, the World Bank, the IMF, and other interested stakeholders."

I feel like an interested stakeholder, but it appears that the draft is only available....for sale on amazon....specifically, amazon.uk. That's one very strange way to try to make global tax policy.

If anyone knows anything about this project, I would like to hear more about it.

Tuesday, May 7, 2013

Call for Papers on Securities Litigation-of interest to those working on corporate tax transparency.

Securities regulations are near and dear to the hearts of tax practitioners and accountants who must deal with tax disclosures required in SEC filings.  Perhaps these regs have been less central to the work of tax law academics, but those of us following the extractive industries transparency initiative in particular (since it is already law) and country-by-country reporting more generally may soon find ourselves immersed in SEC compliance and litigation research. This upcoming workshop in Chicago could be a good opportunity to make some progress--paper submissions are due May 31:
The University of Illinois College of Law and the University of Richmond School of Law invite submissions for the First Annual Workshop for Corporate & Securities Litigation.  This workshop will be held on Friday, November 8, 2013, in Chicago, Illinois. 
OVERVIEW: This annual workshop will bring together scholars focused on corporate and securities litigation to present their works-in-progress.  Papers addressing any aspect of corporate and securities litigation or enforcement are eligible.  Appropriate topics include, but are not limited to, securities litigation, fiduciary duty litigation, or comparative approaches to business litigation.  We welcome scholars working in a variety of methodologies, including empirical analysis, law and economics, law and sociology, and traditional doctrinal analysis. 
Authors whose papers are selected will be invited to present their work at a workshop hosted by the University of Illinois College of Law in Chicago, Illinois, on Friday November 8, 2013. Local costs (lodging and workshop meals) will be covered.  Participants are asked to pay for their own travel expenses.
The workshop is designed to maximize discussion and feedback. All participants will have read the selected papers.  The author will provide a brief introduction to the paper, but the majority of the individual sessions will be devoted to collective discussion of the paper involved. 
SUBMISSION PROCEDURE: If you are interested in participating, please send an abstract of the paper you would like to present to Jessica Erickson at jerickso@richmond.edu  not later than Friday, May 31, 2013.  Please include your name, current position, and contact information in the e-mail accompanying the submission. Authors of accepted papers will be notified by Friday, June 28. 
QUESTIONS: Any questions concerning the workshop should be directed to the organizers—Professor Verity Winship (vwinship@illinois.edu) and Professor Jessica Erickson (jerickso@richmond.edu).

Monday, May 6, 2013

How To Chart Good

Having seen all too many charts that have been labored over in vain by students, academics, and practitioners alike, this resonates.

Irony: it's often difficult to communicate with charts, yet this one does a beautiful job.

Sunday, May 5, 2013

Correcting the record 5 ways on the stories about Sen. Paul blocking "FATCA Treaties"

Just to clarify a few matters, now that I see the Hill has picked up on this idea that somehow Senator Rand Paul is blocking something the folks at Global Financial Integrity are calling "FATCA implementation treaties":

1) There is no such thing as a FATCA implementation treaty.  There are things called "intergovernmental agreements" (IGAs) which the US has been signing with some countries, which override FATCA, making the unilateral statute less onerous than it otherwise would be.  Anyone who is "pro" anti-evasion legislation (is there anyone who isn't?) can be wildly enthusiastic about FATCA, more or less enthusiastic about IGAs (perhaps less since they tend to water FATCA down), and basically uninterested in double tax conventions, which do almost nothing to combat tax evasion. Conversely, anyone who doesn't like FATCA can be enthusiastic about IGAs because they water down FATCA and leave more room for non-compliance, and wildly enthusiastic about double tax treaties, since they do nothing, FATCA-wise.

2)  Double tax conventions are not needed to implement FATCA.  FATCA is a domestic US statute which needs no implementing anything of any kind. It is already the law, it is already in force, and it is already in action.  So let us put to rest any notion that any international agreement could have any impact on the implementation of FATCA. FATCA is going to be difficult to enforce, no question about that. But it is existing law.  Its administrative and above all political difficulties are what have led Treasury--after FATCA was already law--to start thinking about asking for help.

3) Double tax conventions are not needed to implement IGAs.  The IGAs are Treasury's way of reducing the administrative and political burden Congress created for it with FATCA. An IGA would override the FATCA statute to make life easier for both the Treasury and foreign banks. But the IGAs are most certainly not treaties, in fact, just what exactly they are is muddled indeed.  Treasury has suggested that to the extent the US undertakes anything in these IGAs (which is precious little, at best), they are "interpretive" in nature that is, they interpret existing tax treaties. Hence perhaps some confusion: if you want an IGA which involves the US giving you anything back, Treasury is suggesting you may need a treaty for the IGA to "interpret." To be sure, the idea that IGAs are interpretive in nature is a stretch: IGAs are really just sole executive agreements. Treasury is not seeking any kind of congressional approval for them. Therefore no one in congress-Sen Paul or otherwise-can block them by holding up any kind of international agreement. The only way to block an IGA would be through a direct challenge to their legitimacy given that they violate the treaty power, which is supposed to be shared with the senate. Perversely, perhaps, if the IGAs were legitimate treaties, they could be blocked by Sen. Rand. But they are not, so they cannot be.

4) Switzerland already has a double tax treaty with the USA so even if the Switzerland IGA was the kind that theoretically needs a DTT to "interpret" (namely, a Model 1-style), the treaty needed is already in place, with language on information sharing ready to be "interpreted" by an IGA. However, Switzerland has not signed a Model 1 IGA with the US, it has signed a so-called "Model 2" IGA, which is non-reciprocal and binds the US to virtually no action whatsoever. It is for this reason, perhaps, that Treasury has already claimed that Model 2 agreements do not even need a treaty to interpret: that is, the Treasury has suggested that even non-treaty countries can get a Model 2 IGA.  So you never need a treaty with Switzerland to implement the proposed IGA.  Blocking the Swiss treaty may do a lot of things, but stopping the FATCA IGA is most certainly not one of them

5) Hungary and Luxembourg also already have DTTs in place. They are both old (Hungary-1979, Lux-1962) but each has info exchange language (Hungary-art 23, Lux art 28) so Treasury could again "interpret" these with an IGA, again by the logic that the IGAs are interpretive in nature. Of course, there is no IGA yet for Hungary that I know of, and Luxembourg is still mulling things over. If either goes with model 1, fine, DTT already in place. If they go with model 2, see above re Switzerland. Therefore there is no blocking of FATCA, an no blocking of FATCA IGAs, with respect to either of these countries, either.

Summary: IGAs are wholly unconnected to DTTs. The mistaken connection being made between these two completely unrelated legal instruments is understandable: it has been borne of Treasury's attempt to cast the IGAs as interpretive in nature, which at best is an ad hoc attempt to fix a legal impossibility of congress' own creation, without actually explaining their legal pedigree.  But DTTS are in no way necessary to the implementation of FATCA.

Friday, May 3, 2013

Call for Papers: Annual Conference of the Canadian Council of International Law

The organizers of the CCIL's 2013 annual conference have issued a call for papers:

CCIL 42nd  Annual Conference: Call for Papers
Contemporary Actors and their Actions: A New Look at the Formation of International Law
November 14-16, 2013 - Ottawa, Ontario

The Canadian Council on International Law invites paper proposals or summaries of proposed presentations from faculty members, doctoral level graduate students in law and related disciplines, and practitioners, on topics dealing with the theme of its 42nd Annual Conference: “Contemporary Actors and their Actions: A New Look at the Formation of International Law”.

Paper proposals or summaries of proposed presentations in English or French should be no longer than a single page in length and should include a biographical statement or curriculum vitae.  Proposals are due June 3, 2013 and should be sent to manager@ccil-ccdi.ca.

Great topic. More info at the link.

Thursday, May 2, 2013

CTF Conference on Tax & Employee Mobility-McGill Law School, May 29 2013

Inscrivez-vous avant le 4 mai pour profiter du tarif réduit - Mobilité des employés à l'étranger - Journée d'études fiscales - le mercredi 29 mai 2013
Si vous avez de la difficulté à lire ce courriel, s.v.p. visionner la version en ligne.
Afin de vous assurer de bien recevoir nos courriels, ajouter
ctf-fcf@ctf.ca à votre carnet d'adresses.

Bureau 2935
1250, boul. René-Lévesque ouest
Montréal, QC H3B 4W8
Téléphone : (514) 939-6323
Télécopieur : (514) 939-7353

Inscrivez-vous avant le 4 mai pour profiter du tarif "oiseau matinal"
Journée d'études fiscales
Mobilité des employés à l'étranger
Le mercredi 29 mai 2013
8 h 20 à 16 h 45
Suivi d'un cocktail gracieusement offert par Stikeman Elliott
Université McGill, Faculté de droit
3644 rue Peel
Cette année et dans le cadre de la Journée d'études fiscales, la Fondation canadienne de fiscalité a choisi de présenter des conférences ayant pour thème les Canadiens qui travaillent temporairement ou de façon permanente à l'étranger. Plusieurs aspects de la fiscalité seront abordés, tant du point de vue de l'employé que du point de vue de l'employeur, par des experts en la matière.

Les faits saillants de la Journée d'études fiscales comprennent :

(certaines présentations seront en anglais)

• Les aspects fiscaux pour l'employé et pour la société (employeur)
                 > impact sur les régimes de retraite et autres régimes de rémunération
                 > frais de localisation du ou vers le Canada
                 > planification du rapatriement
                 > mécanisme de compensation salariale (tax equalization)
                 > impôt au décès ou impôt sur les successions

• Utilisation d'une société particulière pour « services d'employé »
                 > exemple de mécanismes d'opération
                 > bénéfices potentiels et éléments fiscaux à considérer

• Éléments fiscaux à considérer lors d'un transfert dans un pays émergeant
• Aspects administratifs à considérer
                 > Retenues à la source
                 > Mécanismes de recharge intragroupe

• Visa et autres aspects légaux à considérer

Pour consulter le programme ou pour vous inscrire s.v.p. cliquez ici. Pour toutes informations supplémentaires s.v.p. contactez le bureau de Montréal au 514 939 6323 ou par courriel à adminmtl@ctf.ca 

 Prochains événements :
Le mardi 14 mai 2013: TAX STRATEGIES FOR EXECUTIVE COMPENSATION (en anglais) (Ottawa) (demi-journée)

Pour les jeunes fiscalistes:
Le vendredi 10 mai 2013: PERTES SUPENDUES (Midi-conférence) (Montréal)
Le jeudi 30 mai 2013: ACTIONS ACCRÉDITIVES (Petit-déjeuner fiscal) (Québec)


Register before May 4th to benefit from the Early Bird rate
 Journée d'études fiscales
Employee Mobility - Assignments Abroad 
Wednesday, May 29, 2013 
8 :20 a.m.  –  4 : 45 p.m.
Followed by a cocktail reception sponsored by Stikeman Elliott 
McGill University, Faculty of Law
3644 Peel Street
(Take advantage of our early bird rate by registering before May 3rd, 2013)
This year, the theme for the Canadian Tax Foundation's annual Journée d'études fiscales, is employee foreign assignments. Speakers at this conference will be discussing the various taxation considerations which arise, both from the perspective of the employee and of the employer, when Canadians choose to temporarily or permanently move their place of work abroad. Various aspects of taxation will be analyzed during the course of the day by experts in the field.
Topics covered at the Journée d'études fiscales will include:
(certain presentations will be in English)
• Tax considerations for the employee and employer corporation
           > Impact on retirement savings vehicles
           > Cost of relocation to or from Canada
           > Planning the repatriation
           > Tax equalization
           > Death and inheritance taxes
• Using a special purpose corporation for employee services
          > Examples of methods of operation
          > Potential benefits and taxation considerations
• Taxation issues when considering a move to a developing country
• Administrative issues to consider
         > Source deductions
         > Mechanisms for intra-group charge back
• Visas and other legal considerations
To consult the program or to register, please click here. For any additional information, please contact the Montréal office at 514 939 6323 or by email at adminmtlctf.ca


Wednesday, May 1, 2013

Recent academic scholarship on FATCA

It seems to me that academic attention to FATCA is on the rise. Here is a roundup of recent lectures & publications by law professors (and one student):

Steven Dean delivered a lecture at the University of Antwerp entitled FATCA's Unanswered Questions, description:
Like an asteroid passing close to Earth, the threat of FATCA's implementation has caused great anxiety and much activity. Despite the existence of important questions about FATCA's implementation, it has caused even some of the most reluctant foreign governments to embrace information reporting obligations. Tracing FATCA's origins offers useful insights regarding its likely effects. Even if it ultimately "misses" as a commitment device, FATCA will have a lasting impact on global tax administration.
Susan Morse published a reply to my article on the dubious legal pedigree of FATCA agreements, entitled Why FATCA Intergovermental Agreements Bind the U.S. Government, abstract:
Bilateral intergovernmental agreements (IGAs) relating to the Foreign Account Tax Compliance Act (FATCA) and entered into by the U.S. government reduce the reach of FATCA's withholding tax regime, including the reach of that regime as applied to non-U.S. taxpayers. The validity of these IGAs has been questioned. Yet IGAs have a strong case for binding status as valid congressional-executive agreements or treaty-based agreements. In addition, regardless of IGAs’ status as international agreements, they should bind the U.S. government as valid administrative guidance.
Frederic Behrens (law student) published Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand, abstract:

The Foreign Account Tax Compliance Act (FATCA) became law in 2010 and is an important development in combatting income tax evasion. Under FATCA, American individual and corporate taxpayers must provide comprehensive information to the Internal Revenue Service (IRS) regarding foreign bank accounts. In addition, a more controversial part of FATCA requires foreign banks to report directly to the IRS certain information about financial accounts held by American taxpayers. 
These drastic changes in American tax policy are alarming to the international financial community. International banks are forced to implement expensive compliance programs to satisfy the information reporting requirements. An increasing number of foreign financial institutions will no longer want any involvement with American citizens or investments. Furthermore, Americans living abroad might be forced to denounce their American citizenship in order to gain access to insurance and basic banking options.   
In response to the unilateral imposition of FATCA, foreign governments and banks may lobby for its repeal. This Comment examines factors in the global movement to repeal FATCA and suggests several workable solutions that would be agreeable to the United States and foreign nations. Specifically, this Comment suggests how investment income withholding and increased IRS enforcement actions are a better solution to prevent income tax evasion.

And Itai Grinburg delivered a new paper at NYU, entitled Emerging Countries and the Taxation of Offshore Accounts, abstract:
A new international regime in which financial institutions function as cross-border tax intermediaries is emerging. The contours of that regime will be established during a narrow window of opportunity over the span of the next few years. The resulting regime will have especially important consequences for emerging countries. A uniform, multilateral automatic information exchange system would improve both these jurisdictions’ ability to tax the offshore accounts of their residents and their capacity to tax certain domestic-source income from capital. 
Interestingly, multinational financial institutions’ and emerging countries’ concerns with the emerging international regime are largely aligned. As a result, they may find that they are improbable allies in the battle over taxing offshore accounts. With the G-20 as an agenda-setter and international financial law as the model, a governance structure for an automatic information exchange regime that could be useful to emerging countries’ tax administrations and lower multinational financial institutions’ compliance costs could materialize. The paper explores the necessary architecture, as well as steps emerging countries may take to help that architecture develop.
Many different perspectives emerging. Have I missed any recent scholarship? Please do bring it to my attention if so.

Economist: It would be terrible if people stopped depending on their employers for their health care.

Casey Mulligan says if the law actually applies to Congress, look for it to be far too bountiful, in a Speenhamland kind of way (see also Polanyi). The state, it seems, must do all it can to avoid producing healthy shirkers amongst the general populace, even if that requires dispensing a certain amount of injustice. A sad commentary on both human flourishing and the rule of law, is it not?  Excerpts:
To promote economic efficiency and the goal of universal health coverage, perhaps members of Congress should not be required to enroll in the new insurance exchanges.
...Because members of Congress are accustomed to high-quality medical care provided to them through federal employee benefit programs, one might expect that they would push for top quality care to be delivered through the exchanges too.
...If the exchange plans were good enough, people who are rushing to find a job, and people considering leaving their job, would no longer have to see employment as their only means of obtaining top quality, subsidized coverage. As a result, some of those would work less (see the Congressional Budget Office on some of health reform’s work incentives, and a 1994 explanation from Alan Krueger and Uwe E. Reinhardt). 
...Although politically incorrect and perhaps unfair, allowing members of Congress to keep their federal employee coverage might be the best thing for universal coverage and reducing the impact of the Affordable Care Act on the federal budget.