Alternative approaches to tax risk and tax avoidance: analysis of a face-to-face corporate survey

This paper analyzes the results of a survey of views of large businesses regarding recent UK Government initiatives aimed at modifying taxpayer behaviour and tackling what is perceived by the tax authorities acting on behalf of Government to be unacceptable/aggressive tax avoidance. Specifically, it examines the views of tax directors obtained from face-to-face interviews conducted in spring 2008 with representatives of 30 corporate groups regarding alternative approaches to tax risk and tax avoidance. The paper first describes the experiences and opinions of large business representatives with respect to the Risk Rating Approach, a key feature of the HMRC links with large business programme (Varney Programme), as well as the status of relationships between HMRC and large business more generally. It next considers the respondents’ views on the practical implications of two developing legislative approaches – targeted anti-avoidance rules (TAARs) and principles-based legislation (PBL) – and how these approaches impact upon and are influenced by relationships between HMRC and large businesses

The Vodafone Essar Dispute: Inadequate Tax Principles Create Difficult Choices for India

Although the international taxation system is not new to problems and crises, economic liberalization and the increasing integration of world markets has intensified its difficulties, with MNEs being at the forefront of tax avoidance by taking advantage of loosely co-ordinated international tax treaties. The threat is worrisome enough for emerging economies such as India and China to take notice, despite their earlier stance of regarding foreign investment as a boom, regardless of tax contributions. This article takes a specific example in the case of the Vodafone Essar tax dispute regarding the payment of capital gains tax on the transfer of a controlling interest in an Indian entity from one foreign company to another, in order to illustrate the loopholes in Indian tax law, the choice that is present before Indian courts - a choice between abiding by the principles of international taxation or changing Indian tax policy altogether, and a view on the way international taxation agreements are to be read in light of the norms of international taxation

Reformulating corporate residence: a coherent response to international tax avoidance

This thesis analyzes the concept of corporate residence, with particular reference to the law in the UK and Canada. It explores why corporate residence is relevant in tax policy, how corporate residence is understood in law, and how revenue authorities respond to the use and alleged 'abuse' of residence rules. Part I argues that the residence of taxpayers generally (individual or corporate) remains a relevant factor in international tax design, that taxation of corporations on the basis of residence has some justification, but that there is a disjunction between meaningful residence-based taxation and current definitions of corporate residence in domestic law and tax treaties. The formulations of residence based on incorporation, central management and control, and place of effective management, particularly as applied to multinational enterprises, are considered and are found to be deficient. Part II critically analyzes the major policy responses of the UK and Canadian governments to the exploitation of corporate residence. It argues that key legislative and administrative responses to international tax avoidance activities, for both outbound and inbound investment, are purportedly based on the acceptance of formal corporate residence yet undermine that concept in an effort to impose tax or refuse treaty relief based on where economic interests actually exist. The responses considered are the application of controlled foreign companies legislation to offshore subsidiaries, the invocation of treaty anti-abuse rules with respect to offshore intermediaries, and the use of overarching general anti-avoidance measures to challenge varied structures that rely on offshore entities. These haphazard anti-avoidance rules are overlaid with revenue authorities' indignation at the motivations that underlie many corporate relocations. It is argued that a more coherent approach would be to focus on the objective reality or unreality of corporate establishment, by reformulating corporate residence in domestic law and tax treaties

Tax Treaty Abuse: Is Canada responding effectively?

This paper explores the means by which tax authorities worldwide seek to strengthen their tax treaties, through safeguards of varying nature and scope, in order to identify and prevent what they consider to be abuse of such treaties. These means of challenge may be grouped under two headings: purposive approaches to treaty interpretation, particularly with respect to the terms 'person', 'resident' and 'beneficial ownership'; and broader responses to unacceptable tax avoidance, specifically reliance on treaty anti-abuse principles and domestic anti-avoidance rules. The Canadian response is evinced by two recent cases in which the government unsuccessfully challenged 'treaty shopping' arrangements, MIL (Investments) SA v Canada and Prevost Car Inc v Canada. Building on the existing literature regarding tax treaty shopping and other forms of tax treaty abuse, this work seeks not only to describe and explain the responses to treaty abuse but to make a critical inquiry into the essence of such abuse, particularly as it appears to be viewed by the Canadian revenue authorities. It is argued that the Canadian response to tax treaty abuse is inadequate, largely because it conflates multiple approaches and fails to address a key concern: the existence or lack of genuine economic establishment in the treaty state. The paper concludes with some suggestions for fashioning a more coherent and intellectually honest response to tax treaty abuse.

Who is Subject to Canadian Income Tax

Materials on Canadian Income Tax has become the predominant teaching tool in Canadian law schools for the study of income tax. Students rely on its integrated approach to learning the Canadian income tax regime – including expert commentary, case analysis, and legislation and government policy references. The work is written by a team of esteemed law professors across Canada and edited by Tim Edgar of Osgoode Hall Law School, York University, Arthur Cockfield, Faculty of Law, Queen\u27s University and Fellow at the Taxation Law and Policy Research Institute, Monash University and Martha O\u27Brien at the University of Victoria. It is a casebook-style text that takes a well-organized approach to the study of taxation, which combines commentary from the author team with extracts of leading tax cases and references to government policy pronouncements. The text includes in-depth case studies, references to proposed and enacted legislation, recent Budget proposals, Interpretation Bulletins and other Canada Revenue Agency pronouncements, and expert analysis and commentary. Included also is a complete set of finding tools – featuring a detailed table of cases, a table of statutory references, as well as a comprehensive Topical Index. More than simply a casebook, this authoritative work remains the best first step any student or practitioner can take in their research into the theory and practice of income tax. It is a well-organized, thoughtful and useful research source for an understanding of Canadian income tax principles and practice

Who is Subject to Canadian Income Tax

Materials on Canadian Income Tax has become the predominant teaching tool in Canadian law schools for the study of income tax. Students rely on its integrated approach to learning the Canadian income tax regime – including expert commentary, case analysis, and legislation and government policy references. The work is written by a team of esteemed law professors across Canada and edited by Tim Edgar of Osgoode Hall Law School, York University, Arthur Cockfield, Faculty of Law, Queen\u27s University and Fellow at the Taxation Law and Policy Research Institute, Monash University and Martha O\u27Brien at the University of Victoria. It is a casebook-style text that takes a well-organized approach to the study of taxation, which combines commentary from the author team with extracts of leading tax cases and references to government policy pronouncements. The text includes in-depth case studies, references to proposed and enacted legislation, recent Budget proposals, Interpretation Bulletins and other Canada Revenue Agency pronouncements, and expert analysis and commentary. Included also is a complete set of finding tools – featuring a detailed table of cases, a table of statutory references, as well as a comprehensive Topical Index. More than simply a casebook, this authoritative work remains the best first step any student or practitioner can take in their research into the theory and practice of income tax. It is a well-organized, thoughtful and useful research source for an understanding of Canadian income tax principles and practice