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Double tax relief and dividends - IFA-UK

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Double tax relief and dividends - IFA-UK Powered By Docstoc
					Sarah Fahy - Vice President , Sony Global Tax Office , Europe
Guy France – Senior Director, Sony Global Tax Office, Europe
Joy Svasti-Salee - Executive Director, Ernst and Young LLP
                  - Visiting Prof. Queen Mary University of London
26 January 2011
                                                 Key
                    Key           Issues faced
The principles of                                influencers   What lies
                    influencers   by MNE’s
international tax                                in the        ahead?
                    to-date       today
                                                 future
   Separate entity approach
   An entity is taxed based on its residence
   Source countries may tax income and gains – PE threshold
   Withholding tax may be deducted at source on passive
    income
   A parent company can only tax dividends from, and not
    profits of, a subsidiary
   Interest is deductible and dividends are not
1987
         • CFC rules regarded as acceptable / encouraged by OECD


1990’s
         • Thin capitalisation rules become commonplace


1992
         • LOB concept starts (NL/US DTT) + anti conduit rules


1995
         • Transfer pricing – OECD guidelines (major revision in 2010 )


2005
         • Focus on exchange of information (Art 26 updated)


2010
         • Update to MTC (including new Art 7)
   “Individually powerful” countries, e.g.
     USA
     Japan


   The OECD

   Europe and the ECJ
OECD                 Both                              European

Australia            Austria           Poland          Bulgaria
Canada               Belgium          Portugal         Cyprus
Chile (2010)         Czech Republic   Slovakia         Estonia
Iceland              Denmark          Slovenia         Latvia
Israel (2010)        Finland          Spain            Lithuania
Japan                France           Sweden           Malta
Korea (1996)         Germany          United Kingdom   Romania
Mexico               Greece
New Zealand (1994)   Hungary
Norway               Ireland
Switzerland          Italy
Turkey               Luxembourg
United States        Netherlands
                                          Tax rules of parent
               Listed
            Incorporated
                                           dictate the structure
              resident                    Continuing strong global
                                           powers:
                                              Complex legislation
Operating   Powerful       Complex            Anti-inversion rules
                           domestic
 globally   countries      tax rules          CFC rules and GAARs
                                              Restrictions on interest
                                               deductibility
                                          But recognition of some
              OECD
             members                       that they need to be
                                           competitive ....
   Delivering a more competitive system:
     Creating the right conditions for business investment and
      growth
     Responding to business concerns over instability and
      unpredictability
     Reversing the trend of business leaving the UK

   Principles:
       Lowering rates while maintaining the tax base
       Maintaining stability
       Being aligned with modern business practices
       Avoiding complexity
       Maintaining a level playing field for taxpayers
   Cost    Speed      Globalisation   Technology

   Centralisation of functions

   Rapid growth in emerging markets

   Increased tax transparency

   Complex regulation and aggressive tax authorities
                                         Large populations
               OECD
             “outreach”
                                          attract activity
                                         Trading “in” or “with”
                                          large markets
Low cost    Emerging       People        Increasing experience
                           getting
of labour    Markets      wealthier       of international
                                          taxation
                                         Pick and choose rules?
             New Stock
             Exchanges
                                         Tax a “toll” to do
                                          business?
   The new “individually powerful” countries

       India
       China
       Brazil
       Russia
       Others ...

   G20
   Campaigners ......
   More competition to be the country of the
    parent?
   A shift back to taxation at source?
   CCCTB in (part of) Europe?
   MNE’s recognised for their role as collectors of
    taxes?
   What should the global fundamental principles
    of international tax law be?
   Little cohesion?

   MNE’s need to find new ways to engage with
    Governments particularly in relation to:
     Transfer pricing
     The avoidance of double taxation

				
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posted:11/5/2012
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