The international political community continues to make the most threatening noises about those who they believe do not pay enough tax. Long gone it seems are the days where it was accepted that a person could properly organise his affairs in such a way that the minimum tax lawfully due was paid to the Revenue Services. The voice of the press and politicians means that tax continues to be at the forefront of the public consciousness. There is discernable shift in the attitude of societies to the morality of avoiding the payment of tax. The distinction between tax avoidance, which is lawful, and tax evasion, which is unlawful and criminal, is apparently being quickly forgotten. Politicians no longer speak of the criminality of evasion but the immorality of avoiding tax. It would be foolish to ignore that shift in language.
Many nations, including the U.K. and Canada, tax only domestic profits. One result is that an independent U.S. company can end up paying more taxes than an identical U.S. company owned by a foreign parent. By creating or buying a foreign parent, a company escapes U.S. tax on worldwide income. Drug and technology companies find this particularly enticing because their profits stem from intellectual property such as patents. Transfer those patents to a subsidiary in a zero-tax jurisdiction like Bermuda or The Seychelles, and voila! The bulk of profits, which would otherwise face the 35 percent income tax rate, aren’t taxed anywhere.
In our previous post, we looked at the ways that global corporations minimise their tax burdens by routing income through offshore tax havens and transfer pricing. The ultimate beneficiaries of these shenanigans, of course, are actual people rather than legal entities. Many of these people also take advantage of offshore tax havens to avoid reporting capital income to local authorities. In this second post, we will look at how Gabriel Zucman tracks this hidden wealth and his suggestions for governments to capture missing revenue.
Without adequate planning, the you could lose up to half of your wealth through inheritance taxes,
Estate taxes in some developed countries including Japan and Germany are as high as 50 percent of the wealthiest people's net worth.
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Under previous US transitional FATCA rules, IGAs reached in substance before July 1, 2014, can be treated as being in effect through to the end of 2014, as long as the IGA is signed on or before December 31, 2014.
HM Revenue & Customs has introduced “safeguards” to reduce the potential impact of its proposals to recover tax directly from debtors’ bank accounts.
The plans, which are known as Direct Recovery of Debts (DRD), will allow the Revenue to recover cash directly from the bank accounts, building society accounts and ISA accounts of debtors who owe £1000 or more.
After the plans were met with fierce criticism when they first announced in May, the Revenue has today introduced a variety of new elements to “provide certainty to taxpayers”.
Nobody likes paying taxes. The rich, however, can reduce the burden more easily than others because capital is more mobile than labour. While tax evasion is illegal tax avoidance is not and it is everyones financial responsability to reduce their own tax burden.
It is not against Malaysian law for companies to keep funds in offshore accounts.
Malaysian Companies (SSM) acting chief executive officer Zahrah Abd Wahab Fenner said it was not unusual for companies to keep their funds in offshore accounts. She said this when commenting on 1 Malaysia Development Berhad (1MDB) investments in the Cayman Islands. Zahrah said it was a company’s business decision to invest their money where they wanted.
Minimising taxes and increasing confidentiality are not the only benefits of setting up an offshore company. Although tax effectiveness is the first and foremost benefit that comes to mind when considering offshore companies, the opportunity to considerably reduce business overheads is also a very attractive bonus.
Tax haven crackdown still to deliver missing billions
Tax avoidance, or the use of legal arrangements to reduce tax, is rife. According to the Australian Tax Office (ATO), Australian companies in 2012 sent almost A$60 billion to related parties in tax havens. But the Australian tax authorities are not having much success in averting it.