Sharman, Jason. "The Future of Offshore" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA, Feb 28, 2007 http://www.allacademic.com/meta/p180572_index.html
Abstract: Since the turn of the century Offshore Financial Centres (OFCs), or tax havens, have been roiled by various challenges from the G7 states and international organisations including the OECD, the EU and the FATF. Collectively these interventions, premised on combatting tax evasion and money laundering, have tended to erode tax havens' traditional attractions for non-resident investors: secrecy and light regulation.Currently the pace of change has slowed enough to make a preliminary assessment of what impact these changes have had on the 'offshore world'as a whole, not just individual tax havens. Conventional wisdom, often supported by those in tax havens themselves, is that as tax havens' traditional attractions have been weakened, this decade has and will continue to be lean times.
However, there is some evidence that the pessimism concerning the future of OFCs is considerably overdone. This paper will provide a preliminary assessment of the future of offshoreusing recently published IMF studies of 42 OFCs, interview data from 15 such jurisdictions, and a ten year survey of the commercial investment press, to lay the foundations for a larger project along the same lines.
viernes, 2 de marzo de 2007
Did the OECD Attack on Tax Havens Have Measurable Effects?"
Kudrle, Robert. "Did the OECD Attack on Tax Havens Have Measurable Effects?" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA, Feb 28, 2007
Abstract: The 1998 OECD Report, Harmful Tax Competition, essentially declared war on jurisdictions with practices that most member governments regarded as abusive. The declaration was followed by a set of actions that many have viewed as severely undermining the credibly of the organization with friends and foes alike. The negative reactions of the largely small and weak states classified as ?tax havens? caused a rethinking and a change of tactics within the OECD. This resulted in a rather abrupt change in approach: the replacement of unilateral demands by a kinder, gentler cooperative approach that created the impression for many that the OECD was incompetent, weak, or both. This paper will employ interrupted time series data analysis of tax haven activity to evaluate claims about the effectiveness of the project in changing the location and volume of international investment and the implied changes of tax revenue by other states.
Abstract: The 1998 OECD Report, Harmful Tax Competition, essentially declared war on jurisdictions with practices that most member governments regarded as abusive. The declaration was followed by a set of actions that many have viewed as severely undermining the credibly of the organization with friends and foes alike. The negative reactions of the largely small and weak states classified as ?tax havens? caused a rethinking and a change of tactics within the OECD. This resulted in a rather abrupt change in approach: the replacement of unilateral demands by a kinder, gentler cooperative approach that created the impression for many that the OECD was incompetent, weak, or both. This paper will employ interrupted time series data analysis of tax haven activity to evaluate claims about the effectiveness of the project in changing the location and volume of international investment and the implied changes of tax revenue by other states.
A Level Playing Field and the Space for Small States
Vlcek, William. "A Level Playing Field and the Space for Small States" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA, Feb 28, 2007
Abstract: In the course of producing a project against tax competition, the OECD has insisted on the establishment of a level playing field. The subjects of this project are predominantly small states with offshore financial centres and few alternatives available to achieve economic development. This paper reflects upon the broad parameters of the OECD's concern with tax competition and its proposed method to resolve the issue.
The following argument is an interrogation of the meaning embedded within the term 'level playing field' as used in the debate over international tax competition. It outlines some of the broad consequences that an OECD success with implementing the project holds for small economies. The conclusion reached is that a level playing field in the global political economy is a mirage with more substance for some states than for others.
Abstract: In the course of producing a project against tax competition, the OECD has insisted on the establishment of a level playing field. The subjects of this project are predominantly small states with offshore financial centres and few alternatives available to achieve economic development. This paper reflects upon the broad parameters of the OECD's concern with tax competition and its proposed method to resolve the issue.
The following argument is an interrogation of the meaning embedded within the term 'level playing field' as used in the debate over international tax competition. It outlines some of the broad consequences that an OECD success with implementing the project holds for small economies. The conclusion reached is that a level playing field in the global political economy is a mirage with more substance for some states than for others.
sábado, 24 de febrero de 2007
Forex rules in China real estate ownership
I encourage readers to have a look a this article entitled "Foreign Ownership Of Real Estate In China/China's New Forex Rules" writed by Steve Dickinson, from chinalawblog.com:
"In July 2006, the Chinese government issued rules prohibiting foreign individuals and companies from directly owning commercial real estate in China. Just this month, China's State Administration of Foreign Exchange ("SAFE") issued new foreign exchange rules. In my experience dealing with real estate investors here in Shanghai and elsewhere in China, both of these rules are misunderstood.
The Opinion on Regularizing and Managing the Entry of Foreign Capital into the Real Estate Market ("Opinion") requires foreign participation in commercial real estate investment be through a Chinese commercial entity. This means foreign companies and individuals can own real estate in China only through a Foreign Invested Enterprise (FIE), such as a Wholly Foreign Owned Entity (WFOE) or through an Equity or Contractual Joint Venture (JV). Residential property not for personal use is considered commercial real estate and its ownership is similarly restricted. This is true even if the residential property is not rented to third parties.
This rule applies to all of China. The ramifications of this new rule are clear: foreign individuals and foreign companies can buy commercial real estate in China only if they do so in the name of a Chinese corporation (such as a WFOE or JV) established for this purpose. This is a clear and inflexible rule. It also is not actually a change in Chinese law, just a reaffirmation by opinion of what has always been the case.
The opinion has one limited exception to its no foreign ownership rule and that is for residential real estate as a personal residence. This exception is limited to Representative Offices or to foreign individuals who have been legally resident in China for at least one year while employed or as a student. These foreign individuals are limited to one residence. There are somewhat less restrictive rules for residents of Hong Kong and Taiwan.
Following on the Opinion, the relevant authorities issued detailed rules on foreign exchange issues related to the foreign individual purchase and sale of real estate. These rules were issued on September 1, 2006 as the Notice on Various Issues Relating to the Management of Foreign Exchange in Connections with the Regularization of the Real Estate Market ("Forex Notice"). The Forex Notice recognizes that most individual purchasers of real estate in China will be using foreign exchange form their home country for the purchase. These rules require proof of the real estate purchase in China, proof of identity, and proof of residence for at least one year. The exchange of funds must be made at the real estate buyer's bank, with the fund directly transferred to the seller's bank. No cash can be withdrawn.
The Forex Notice also provides rules for converting Renminbi (RMB) proceeds from a real estate sale by foreign individuals. The Forex Notice provides that RMB proceeds can be converted to foreign exchange if the foreign individual provides an application, a copy of the sales agreement, and proof of payment of all taxes related to the property and the sale.
The local tax offices with which I have discussed this tell me "all taxes" means any capital gains tax resulting from the sale and all taxes accrued during the foreign individual's ownership of the property, including the stamp taxes due on rental payments and individual income tax on any income earned from the property. Without proof of payment of taxes, conversion of foreign exchange will not be permitted. One of the tax officers with whom I discussed this told me that taxes are not a major issue in foreign exchange conversion since the sale itself would not be approved absent proof of payment of taxes.
I am aware of many foreign residents in China who are going to be facing a very unpleasant reality when they try to sell their China properties. Many foreign owners of real estate in China ignore the requirements of Chinese individuals income tax law and fail to file the appropriate tax return. Since taxes are owed on income earned from real property, the Chinese government will not approve the property's sale until the tax issue is resolved. This is another example of China starting to take a very serious approach to tax compliance.
I am also aware of a number of foreign residents who are violating Chinese law by buying more than one property. They tell me they feel safe in doing so because the Chinese government does not effectively track foreign real estate ownership. These people are taking large and unnecessary risks. The risk is unnecessary because all they need do to buy multiple properties legally is to form a WFOE and make the purchases through it. I view the risks as huge because I fully expect China to have effective tracking mechanisms in place before most of these people are able to sell.
This month, SAFE also issued new rules concerning the conversion of foreign exchange to RMB, called the Method for Management of Foreign Exchange by Individuals ("Forex Method") and the Detailed Rules on the Method for Management of Foreign Exchange by Individuals ("Detailed Rules"). The new system works as follows:
a. Individuals can freely convert foreign exchange to RMB up to an annual limit of $50,000 US.
b. When individuals exceed the $50,000 US annual limit, they must obtain permission for the exchange, which permission is automatic, provided the individual provides proof the exchange is for a specific and legitimate purpose.
c. The Forex Method provides that a foreign individual's sale and purchase of real estate is a legitimate purpose and should be processed according to existing rules. Section 21 of the Detailed Rules provides that such transactions should be processed according to the Forex Notice discussed above.
Accordingly, the new Forex system established this month has no impact on the purchase and sale of real estate in China by foreign individuals. Despite this, many people who contact me incorrectly believe the new rules imposed an absolute limit on foreign exchange conversion or prohibit foreign exchange conversions for buying real estate. The new rules are actually a liberalization of the old rules, not an attempt to impose new restrictions.
For those wishing to learn more on China real estate, mark May 3 and 4 on your calendar as both Steve and I will be speaking in San Francisco on those days at a seminar on China real estate investments. Steve will be speaking on China's new real estate regulations and I will be moderating a session on China's second tier cities. More information on this seminar will be forthcoming shortly."
"In July 2006, the Chinese government issued rules prohibiting foreign individuals and companies from directly owning commercial real estate in China. Just this month, China's State Administration of Foreign Exchange ("SAFE") issued new foreign exchange rules. In my experience dealing with real estate investors here in Shanghai and elsewhere in China, both of these rules are misunderstood.
The Opinion on Regularizing and Managing the Entry of Foreign Capital into the Real Estate Market ("Opinion") requires foreign participation in commercial real estate investment be through a Chinese commercial entity. This means foreign companies and individuals can own real estate in China only through a Foreign Invested Enterprise (FIE), such as a Wholly Foreign Owned Entity (WFOE) or through an Equity or Contractual Joint Venture (JV). Residential property not for personal use is considered commercial real estate and its ownership is similarly restricted. This is true even if the residential property is not rented to third parties.
This rule applies to all of China. The ramifications of this new rule are clear: foreign individuals and foreign companies can buy commercial real estate in China only if they do so in the name of a Chinese corporation (such as a WFOE or JV) established for this purpose. This is a clear and inflexible rule. It also is not actually a change in Chinese law, just a reaffirmation by opinion of what has always been the case.
The opinion has one limited exception to its no foreign ownership rule and that is for residential real estate as a personal residence. This exception is limited to Representative Offices or to foreign individuals who have been legally resident in China for at least one year while employed or as a student. These foreign individuals are limited to one residence. There are somewhat less restrictive rules for residents of Hong Kong and Taiwan.
Following on the Opinion, the relevant authorities issued detailed rules on foreign exchange issues related to the foreign individual purchase and sale of real estate. These rules were issued on September 1, 2006 as the Notice on Various Issues Relating to the Management of Foreign Exchange in Connections with the Regularization of the Real Estate Market ("Forex Notice"). The Forex Notice recognizes that most individual purchasers of real estate in China will be using foreign exchange form their home country for the purchase. These rules require proof of the real estate purchase in China, proof of identity, and proof of residence for at least one year. The exchange of funds must be made at the real estate buyer's bank, with the fund directly transferred to the seller's bank. No cash can be withdrawn.
The Forex Notice also provides rules for converting Renminbi (RMB) proceeds from a real estate sale by foreign individuals. The Forex Notice provides that RMB proceeds can be converted to foreign exchange if the foreign individual provides an application, a copy of the sales agreement, and proof of payment of all taxes related to the property and the sale.
The local tax offices with which I have discussed this tell me "all taxes" means any capital gains tax resulting from the sale and all taxes accrued during the foreign individual's ownership of the property, including the stamp taxes due on rental payments and individual income tax on any income earned from the property. Without proof of payment of taxes, conversion of foreign exchange will not be permitted. One of the tax officers with whom I discussed this told me that taxes are not a major issue in foreign exchange conversion since the sale itself would not be approved absent proof of payment of taxes.
I am aware of many foreign residents in China who are going to be facing a very unpleasant reality when they try to sell their China properties. Many foreign owners of real estate in China ignore the requirements of Chinese individuals income tax law and fail to file the appropriate tax return. Since taxes are owed on income earned from real property, the Chinese government will not approve the property's sale until the tax issue is resolved. This is another example of China starting to take a very serious approach to tax compliance.
I am also aware of a number of foreign residents who are violating Chinese law by buying more than one property. They tell me they feel safe in doing so because the Chinese government does not effectively track foreign real estate ownership. These people are taking large and unnecessary risks. The risk is unnecessary because all they need do to buy multiple properties legally is to form a WFOE and make the purchases through it. I view the risks as huge because I fully expect China to have effective tracking mechanisms in place before most of these people are able to sell.
This month, SAFE also issued new rules concerning the conversion of foreign exchange to RMB, called the Method for Management of Foreign Exchange by Individuals ("Forex Method") and the Detailed Rules on the Method for Management of Foreign Exchange by Individuals ("Detailed Rules"). The new system works as follows:
a. Individuals can freely convert foreign exchange to RMB up to an annual limit of $50,000 US.
b. When individuals exceed the $50,000 US annual limit, they must obtain permission for the exchange, which permission is automatic, provided the individual provides proof the exchange is for a specific and legitimate purpose.
c. The Forex Method provides that a foreign individual's sale and purchase of real estate is a legitimate purpose and should be processed according to existing rules. Section 21 of the Detailed Rules provides that such transactions should be processed according to the Forex Notice discussed above.
Accordingly, the new Forex system established this month has no impact on the purchase and sale of real estate in China by foreign individuals. Despite this, many people who contact me incorrectly believe the new rules imposed an absolute limit on foreign exchange conversion or prohibit foreign exchange conversions for buying real estate. The new rules are actually a liberalization of the old rules, not an attempt to impose new restrictions.
For those wishing to learn more on China real estate, mark May 3 and 4 on your calendar as both Steve and I will be speaking in San Francisco on those days at a seminar on China real estate investments. Steve will be speaking on China's new real estate regulations and I will be moderating a session on China's second tier cities. More information on this seminar will be forthcoming shortly."
lunes, 5 de febrero de 2007
Corporate Tax Policy and International Mergers and Acquisitions - Is the Tax Exemption System Superior?
Corporate Tax Policy and International Mergers and Acquisitions - Is the Tax Exemption System Superior?
Johannes Becker (University of Cologne) and Clemens Fuest (University of Cologne and CESifo (Center for Economic Studies and Ifo Institute for Economic Research) published this paper at CESifo Working Paper Series No. 1884
Here is theAbstract:
In this paper we ask whether recent claims that the US government should switch from the tax credit system to the exemption system are justified. We study corporate taxation in a model where international capital flows are either greenfield investment projects or acquisitions of existing firms, and where investment is motivated by either cost reduction or market entry reasons. The paper asks how corporate taxation affects the international allocation of capital under different double taxation regimes. We find that the standard view on international taxation only prevails in the case of cost driven greenfield investment. In all other cases the deduction system is no longer optimal from a national perspective and the foreign tax credit system fails to ensure neutrality. However, the desirability of the tax exemption system has to be qualified. We show that the cross border cash flow tax system dominates the exemption system in terms of optimality properties.
Available at SSRN: http://ssrn.com/abstract=959991
sábado, 20 de enero de 2007
Taxes Aren't Beautiful: A Singer Moves to Switzerland to Avoid British Taxes
From Taxprof/typepad.com:
"British singer-songwriter James Blunt -- best known for his hit single You're Beautiful -- has decided to establish residence in Switzerland to avoid British taxes. From press reports:
Blunt, who earned £5 million ($9.8 million) from his debut album Back To Bedlam, is the latest in a long line of high-earners to quit their homeland for Switzerland - Phil Collins resides there and French rock legend Johnny Hallyday set up residence in Gstaad only last month.
Patrick Messeiller, director of tourism for Verbier, confirmed a report in the Swiss daily Le Matin that Blunt, who is a frequent visitor to the mountain village, had registered with the tax office there.
Each Swiss canton (state) sets its own tax rates, and can cut special deals with wealthy foreigners that allow them to pay only a fraction of what they would have to pay elsewhere. "
domingo, 7 de enero de 2007
Taxation at Casinos and Gambling
Stream, Christopher., Thompson, William. and Myers, Nathan. "Casino Taxation Rates: Politics as Unusual" Paper presented at the annual meeting of the Southern Political Science Association, Hotel InterContinental, New Orleans, LA, Jan 03, 2007 http://www.allacademic.com/meta/p141982_index.html
Abstract: Taxes matter to business. They affect location decisions, job creation and retention, international competitiveness, and the long-term health of a state’s economy. But relatively little attention has been paid to the taxes on casinos and legalized gambling businesses. Research on gambling and casinos has largely focused on the adoption of such policy innovations in the states.
Less attention has been paid to the taxes rates on these types of firms. Among the states, the gaming tax rates vary considerably. Some states have adopted tax rates in the low teens while others collect close to 50 percent of a casino’s profits. It appears that while states with legalized gambling mimic each other in terms of the types of gaming allowed, they do not appear to follow each other in the types of rates “charged” to the casino firms. This Article examines gaming taxation rates and identifies some changes across all fifty states. We attempt to identify the factors that influenced the adoption of these tax rates in each state. We argue that state policymakers view casino taxes differently than the way they view taxes on other business firms.
These views greatly alter the politics of casino taxation in the states. The authors also provide updates on the status of gambling in several venues and suggest future research questions on the impact of gambling as an economic development tool for the states.
Abstract: Taxes matter to business. They affect location decisions, job creation and retention, international competitiveness, and the long-term health of a state’s economy. But relatively little attention has been paid to the taxes on casinos and legalized gambling businesses. Research on gambling and casinos has largely focused on the adoption of such policy innovations in the states.
Less attention has been paid to the taxes rates on these types of firms. Among the states, the gaming tax rates vary considerably. Some states have adopted tax rates in the low teens while others collect close to 50 percent of a casino’s profits. It appears that while states with legalized gambling mimic each other in terms of the types of gaming allowed, they do not appear to follow each other in the types of rates “charged” to the casino firms. This Article examines gaming taxation rates and identifies some changes across all fifty states. We attempt to identify the factors that influenced the adoption of these tax rates in each state. We argue that state policymakers view casino taxes differently than the way they view taxes on other business firms.
These views greatly alter the politics of casino taxation in the states. The authors also provide updates on the status of gambling in several venues and suggest future research questions on the impact of gambling as an economic development tool for the states.
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