Locational considerations in attracting multinational coporate regional headquarters: the relevance and role of tax law and tax incentives

The last decade has witnessed an intensification in the global competition for foreign investment. In particular, both developed and developing nations alike have sought to attract investment by multinational companies in high level service operations. Increasingly these nations have turned to tax policy with a view to enhancing their attractiveness as a destination. The competition to attract Southeast Asian regional headquarters of multinational corporations is a case in point. This competition has been stimulated by the perception that the market leader, Hong Kong, is losing its lustre. This was certainly the dominant view leading up to 1997. In an effort to improve their competitive position many Southeast Asian nations have enacted tax concessions targeted at regional headquarters. Undoubtedly Singapore has been the most proactive nation in this regard although Malaysia, the Philippines, China, Thailand, Taiwan and Australia have also enacted regional headquarters tax incentives to some degree. Whilst Singapore's success in attracting regional headquarters may appear a compelling case for these incentives there is evidence to suggest that other factors dominate the locational decision namely: geographical location and proximity to markets, political stability, quality of infrastructure, availability of skilled labour, and pre-existing operations. Tax would appear to be simply viewed as a cost by multinationals and, although relevant, is not decisive except possibly at the margin. That is, all else being equal then the tax regime of a country may be determinative in a negative sense. Most significantly, however, research has identified that tax concessions cannot compensate for critical deficiencies in the other determinants. These conclusions should be of particular interest to policymakers in developing Asian nations considering introducing or extending tax incentives to attract foreign direct investment. Of course the analysis is restricted to the influence of tax incentives on one particular type of foreign investment. Nevertheless the findings underscore the need for careful consideration of the costs and benefits of such measures before implementing them. This is not to deny fiscal policy any role in encouraging investment in a developing nation. However in lieu of legislative tax incentives or negotiating special confidential deals a moderate tax regime that is both clear and non-discriminatory in its application may best serve to foster a positive environment for both domestic and foreign investment

The Australian and Tokyo Emissions Trading Schemes: two ways to skin a cat

As part of its response to climate change the 1997 Kyoto Protocol envisages the employment of emissions trading schemes ("ETS") to provide a market based incentive to reduce emissions and to engage in carbon sequestration activities. Such schemes would also serve to encourage the creation of an industry focused on energy conservation and alternatives to energy production – so called "green" or "clean" energy. Whilst a number of jurisdictions have introduced ETSs there is no definitive model. In 2010 the Tokyo Metropolitan Government ("TMG") established an ETS and Australia had a comprehensive nationwide regime in place from 1 July 2012 until 30 June 2014. Notably the approaches adopted in the two jurisdictions have marked differences

Australian tax controversies and human rights

Increasing conflicts and fears of overreach by tax administrators have seen many countries generate taxpayer-specific statements of rights. Australia has a Taxpayer's Charter but experience with this illustrates the limitations of both the Charter, unsupported by legislative mandate, and the traditional legal remedies in the resolution of tax controversies. The evident need for more effective recognition of taxpayers' rights has resulted in the Inspector-General of Taxation currently reviewing the Charter. A source of inspiration could be the tax jurisprudence stemming from the European Convention on Human Rights

"It's the vibe of the thing": Esquire Nominees (re) considered by the High Court

The High Court has revisited the concept of corporate residence for tax purposes and challenged the conventional wisdom that previous authorities had applied a form over substance approach to determining residency

"It's the vibe of the thing": Esquire Nominees (re) considered by the High Court

The High Court has revisited the concept of corporate residence for tax purposes and challenged the conventional wisdom that previous authorities had applied a form over substance approach to determining residency

Interest deductibility: the saga continues

[Extract] The rules relating to the deductibility of interest in Australia have long been contentious and unclear. The problem is that the underlying tests, namely the use to which the borrowed funds are put, the occasion or purpose of the borrowing and sometimes the motive for the borrowing, often tend to march in different directions depending upon the facts

Australian tax controversies and human rights

Increasing conflicts and fears of overreach by tax administrators have seen many countries generate taxpayer-specific statements of rights. Australia has a Taxpayer's Charter but experience with this illustrates the limitations of both the Charter, unsupported by legislative mandate, and the traditional legal remedies in the resolution of tax controversies. The evident need for more effective recognition of taxpayers' rights has resulted in the Inspector-General of Taxation currently reviewing the Charter. A source of inspiration could be the tax jurisprudence stemming from the European Convention on Human Rights

Diverted profits tax: all the way with the UK

Analysis of the Government's new diverted profits tax directed at tax avoidance by multi-national companies

Interest deductibility: the saga continues

[Extract] The rules relating to the deductibility of interest in Australia have long been contentious and unclear. The problem is that the underlying tests, namely the use to which the borrowed funds are put, the occasion or purpose of the borrowing and sometimes the motive for the borrowing, often tend to march in different directions depending upon the facts

Coalition's "emissions trading scheme" commences

[Extract] The Coalition's safeguard mechanism is designed to ensure that affected facilities can readily comply by setting loose caps on emissions. It is unlikely to contribute to emissions reductions in its current form, but could form the basis for a functional emissions trading scheme (ETS) in the future