International Taxation (Fach) / Definitions (Lektion)

definitions

Diese Lektion wurde von Liss93 erstellt.

Lektion lernen

Diese Lektion ist leider nicht zum lernen freigegeben.

zurück  |  weiter 1 / 1

• Taxes what we pay for a civilised society, confined to compulsory, unrequited payments to the general government
• tax base the object to which the tax applies, including income, consumption, wealth or the person
• Equity equates to fairness, includse horizontal equity, vertical equity, cross-border equity and intergenerational equity. It contains two elements: the ability to pay and the benefit principle. If perceives as inequitable, then avoidance, redirection of resources or evasion may take place.
• evasion the illegal or fraudulent arrangement of affairs to eliminate or reduce tax liability
• The Laffer Curve demonstrates that there is a point at which an increase in the rate of tax will actually result in declining tax revenue.
• consumption taxes paid in respect of the enjoyment of final goods or services in the country in which they are consumed. they can either be broad based or narrow based.
• tax incentives encouraging certain behaviour through a tax break, tax holiday or special tax treatment, e.g. pension contributions or encouragement to locate in particular geographical locations
• De Beers Consolidated Mines Limited v Howe (1905) leading case on the meaning of "central management and control": diamong mining and broking, UK and South African centres, SA incorporation, directors' meeting in SA and UK: It's the quality of the decision making that country for residency purposes, tax at stake = approx 300 million pound in today's values
• Branch a geographical outpost of the parent company: simpler to operate and so reduction in costs, usually no foreign capital taxes, usually no withholding tax on profit repatriation, may be special branch taxes, losses can be absorben in home country, asset transfers can usually be made without tax consequences
• Subsidiary limited liability, better local image, possibly easier access to local incentives and loans, flexible profit repatriation (dividend declared to suit the parent company), sale of shares or business (provides choice), depending on the location there may be lower tax rates
• Joint venture benefits of access to local markets and local knowledge, drawbacks of not always being in control of developments - paying dividends or expanding the JV operation
• E-commerce little or no physical presence, very easy to move locations and so change tax jurisdiction under which profits are taxed, very responsive to tax incentives, knock-on effect of expanding businesses can be appealing to governments, and so supported by them
• Unilateral relief a company that is resident in a country can usually claim some DT relief irrespective of whether there is a DTR treaty in place because most countries have some form of DT relief built into their tax laws.
• Bilateral treaties most countries will have a network of DTRs with countries they trade with, they are negotiated on a case-to-case basis, using a standard template
• Exemption tax is paid in source country and no further tax in country of residence
• credit tax paid in both source country and the country of residence, but allowance (credit) is given in the residency country for tax already paid in the source country - often limited to the tax paid/ rate in the resident country
• deduction tax paid in source country and net amount taxed in country of residence
• Withholding tax (WHT) is often paid on dividends and some interest and royalty payments. It is deducted by the paying comany before making the payment to the shareholders etc, the level of WHT can sometimes be dependent on the amount of the shareholding - that's why JVs are problematic
• capital export neutrality don't want to distort sound business decisions, but tax competition seeks to change behaviour (marketplace) in such a way as to ensure local businesses are not disadvantaged if they seek to expand overseas
• Double Tax Treaties/ Agreements (DTAs) usually are between two countries, but can be more (Caribbean, Scandinavia). An agreement between countries that clarifies the tax rules on specific subjects; a bargain or contract outlining what one country will give up in return for what the other will offer. Technically they are bilateral treaties between countries, also known as “conventions”, they have force of law and generally override domestic law.
• Article 1 Persons covered - this convention shall apply to persons who are resident of one or both of the contracting states. Need to consider the meaning of persons (art. 3), resident (art. 4), contracting states. Purpose of this article is to limit the entities that can benefit from the DTA.
• Article 2 Taxes covered - identifies taxes covered by the DTA. It can refer in general terms to wage taxes, income taxes, capital taxes etc. Sometimes strange or peculiar taxes included by some countries, e.g. tax on public entertainers (Sweden) or Church Tax (Finland)
• Article 3 General Definitions - paragraph 1 important because it defines some fundamental terms (person, company, enterprise), paragraph 2 states that any term not defined in DTA has its meaning as used in domestic law, which can give rise to difficulties when the term is not defined and its meaning is different in law of each contracting state
• Article 4 resident - very important to know where an individual or other entity is resident under the DTA, the first paragraph of Article 4 sets out the general rule. For a DTA to work it is important that one of the states must be the residence state, but it could be that under domestic law, an individual or other entity is resident in each of the states. Tie breaker clauses are used to settle - for treaty purposes - the taxpayer's residence.
• Article 6 Income from immovable property - shall have the meaning which it has under the law of the contracting state in which the property in question is situated, which generally is land and buildings. Usually includes agriculture or forestry, accessory property, rights to variable and fixed payments for working natural resources and rents. This income MAY be taxed in country of location of property - giving the state in which the property is situated the right to tax any income derived from the property, but doesn't say anything about taxing the income in the state of residence of the recipient.
• Article 8 shipping, inland waterways, transport and air transport
• Article 10 dividends - distribution of profits to shareholders by a company limited by shares etc. paragraph 1 states that dividends paid by a company which is resident of a contracting state to a resident of the other contracting state MAY be taxed in that other state. Paragraph 2 states that however, such dividends MAY also be taxed in the contracting state of which the company paying the dividend is a resident and according to the laws of that state, but if the beneficial owner of the dividends is a resident of the other contracting state, the tax so charged shall not exceed: 5% of the gross amount of the dividends provided the taxpayer directly holds at least 25% of the share capital. So dividends may be taxed in both states, but withholding tax on dividends by the source state may be limited or varied by % of shareholding.

zurück  |  weiter 1 / 1