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Greece sends 4,000 tax inspectors on anger management courses (at EU expense of course)

Below is an excerpt from an article in the Guardian a few weeks ago. At first I thought it was a spoof, but no, the EU really is funding anger management classes for 4,000 Greek tax staff.

Chris Bale's insight:

Below is an excerpt from an article in the Guardian a few weeks ago. At first I thought it was a spoof, but no, the EU really is funding anger management classes for 4,000 Greek tax staff. As a Eurosceptic Brit this seems to me to be a classic small-scale example of how the EU fritters away cash and throws good money after bad. Anyway, have a read for yourself.......


"Today, in Greece, everyone is either unhappy or angry when they have to go and pay at the tax office," Fotis Kourmouris, a senior official at the finance ministry's public revenues department said. "There is a lot of negative emotion … in the framework of better customer service, classes in psychological and emotional intelligence had become necessary."


An alarming rise in violent incidents against tax officers prompted Athens's fragile two-party coalition to launch the training. With more and more levies being slapped on ordinary Greeks – while the rich and well connected are perceived to get off scot-free – inspectors have found themselves at the sharp end of popular rage. In recent months visiting auditors have been chased out of remote villages, hounded out of towns and booted off islands by an increasingly desperate populace.


"We've had multiple cases of violence at tax offices by angry members of public, including physical assaults; shots were fired in one case, and one attacker came with an axe," said Trifonas Alexiadis, vice-chairman of the national association of employees at state financial services.


About 4,000 tax office staff are required to attend the EU-funded courses, which cover such challenges as attendees dealing with an imaginary rude-caller moments after their spouse has filed for divorce.


Standing in line on the first floor of a graffiti-splattered tax office in central Athens, the accountant Heracles Galanakopoulos agreed. "They produce a law that nobody understands and then produce another three to explain it. By the time people get here they are really very angry," he lamented, pointing around the room of bulging paper files and ill-tempered personnel.

"I spend at least five or six hours a day reading up on all these new laws and still can't keep up. Anger management is a nice idea but in a system that is so absurd it's not going to make a jot of difference."


Full article here: http://www.theguardian.com/world/2014/mar/16/greece-tax-inspectors-anger-management-class

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Australian Tax Office offers amnesty for tax evaders with money parked in hidden offshore accounts

The Tax Office is allowing Australians with money parked in offshore accounts to avoid harsh penalties by coming forward.
Chris Bale's insight:

The Tax Office is allowing Australians with money parked in offshore accounts to avoid harsh penalties by coming forward, in an amnesty program worth up to half a billion dollars.


ATO Commissioner Chris Jordan will announce the program today, which will reduce the penalties for taxpayers who hand over information about their hidden accounts over the past four years.

The program is being drummed up as the 'last chance' for tax evaders to make peace with the Tax Office, before greater information sharing powers with overseas jurisdictions come into effect.


''We're getting into a world where there may be a lot more automatic exchange of information,'' ATO Deputy Commissioner Michael Cranston said.


''What we're saying to taxpayers who have stayed hidden is, one day you will get caught. And it will be a lot worse for you when you do.''

The program is targeting rich individuals but Mr Cranston said there was nothing to stop a company such as Google or Apple from coming forward.


''If they've concealed some income from the Australian tax authorities and want to disclose it to us, we would have a look at it,'' he said.

Efforts by the government to claw back revenue from tax havens were stalled recently, with Treasury admitting its new treaty with Switzerland doesn't go far enough to catch evaders who have already pulled their money out of their accounts.


But the tax office said the global push towards greater transparency was closing loopholes and prompting new agreements with previously secretive nations.


"We have very effective exchange arrangements with those countries where people might have parked their assets and incomes, such as (British Virgin Islands), Bermuda, Gernsey, Jersey and even Switzerland," Mr Cranston said.

"If you think your Swiss bank account is going to be protected going forward, well, that is not going to happen."

The ATO said the amnesty program would bring in up to $500 million in otherwise lost revenue for the government, as well as bringing assets back into the Australian tax system for future tax collection.


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Caterpillar starts to defend its offshore tax structuring in advance of US Senate investigative panel on April 1

Caterpillar Inc. began defending its international tax maneuvers as a U.S. Senate investigative panel set an April 1 hearing to examine the company’s “offshore tax strategy.”

Chris Bale's insight:

Caterpillar Inc. began defending its international tax maneuvers as a U.S. Senate investigative panel set an April 1 hearing to examine the company’s “offshore tax strategy.”


Representatives from Caterpillar and PricewaterhouseCoopers LLP will testify, according to the hearing notice posted today by the Senate’s Permanent Subcommittee on Investigations.


The committee, led by Michigan Democrat Carl Levin, is continuing an inquiry into U.S.-based multinational corporations that has revealed details about how Apple Inc., Microsoft Corp. and Hewlett-Packard Co. use cross-border transactions to reduce the U.S. taxes they pay.

“We are a leading U.S. exporter and pay U.S. income tax on sales in the United States as well as on export sales,” Rachel Potts, a Caterpillar spokeswoman, said in a statement today that was the company’s first comment on the hearing. “Caterpillar’s effective tax rate averages about 29 percent, which is relatively high for a company with substantial earnings generated from business activities outside the United States.”


Potts declined to say which company executives will testify. The witness list will be posted March 28.

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Ukraine Parliament To Consider 25% Deposit Tax - Domestic Small businesses bound to suffer whilst the UHNWIs move assets overseas

Ukraine's parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.

Chris Bale's insight:

From Tax-News.com Moscow desk....


Ukraine's parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.


The proposed amendments to banking and tax legislation were put forward by Yevhen Sihal, who is a member of the country's ruling Party of Regions. In an explanatory note submitted with the drafts, he argued that the higher tax rate will encourage consumer spending, reduce the cost of business loans, and provide extra funding for the country's Pension Fund. Sihal also explained that his tax proposal is based on the experience of the Russian Federation.


Sihal's proposals have united the National Bank of Ukraine (NBU) and the country's Communist Party in opposition. The NBU was quoted as saying that it was concerned about the politicization of economic issues, and that its policy was to increase the deposit base in line with international practice, while Communist leader Petro Symonenko suggested that the owners of large deposits will simply move their funds abroad to avoid the tax.




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UAE to sign FATCA agreement soon

The US and UAE governments are in the process of signing the FATCA Intergovernmental Agreement (IGA). Under this agreement, banks and financial institutions in the UAE will be required to annually compile data for submission to the UAE regulatory

Chris Bale's insight:

The US and UAE governments are in the process of signing the FATCA Intergovernmental Agreement (IGA). Under this agreement, banks and financial institutions in the UAE will be required to annually compile data for submission to the UAE regulatory authorities. The UAE Ministry of Finance would then send this data to the US Internal Revenue Service.


Bankers say all banks in the UAE will be forced to comply as they must rely on US correspondent banks to clear dollar denominated transactions. Non-compliance could invite sanctions that could include withdrawal of US dollar clearing rights with correspondent banks.

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Tax Treatment of Islamic Finance in the MENA Region - lecture by Mohammed Amin

Chris Bale's insight:

This is a very interesting lecture for the Institute of Islamic Banking and Insurance, (IIBI), in which Mr Amin (retired PwC tax partner) reported on the results of a research study that he led.

The study was sponsored by Qatar Financial Centre Authority in partnership with the International Tax and Investment Center, based in Washington DC. It reviewed the tax treatment of four common Islamic finance structures, commodity murabaha, sukuk, salaam and istisna in eight MENA region countries: Egypt, Jordan, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Turkey, and also in the Qatar Financial Centre.

More info about the research here: http://www.mohammedamin.com/Islamic_finance/MENA-cross-border-IF-taxation-report.html

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Is Dave Camp really the best hope for tax reform in Corporate America ?

Is Dave Camp really the best hope for tax reform in Corporate America ? | Totally Tax | Scoop.it
The latest Miller & Chevalier survey of corporate tax officers finds six in 10 doubtful of progress in the waning days of the Obama administration.
Chris Bale's insight:

For years, President Obama has been lamenting the sad state of the U.S. tax code. Like many in Washington, Obama has been particularly vocal in his concern about the 35-percent corporate rate, the highest statutory rate for business in the developed world.


But corporate America appears to have given up hope that Obama will do anything about it. Just take a look at the latest survey of big-company tax officers by the D.C. law firm Miller & Chevalier.


For the first time since the firm began conducting the survey in 2007, not a single respondent predicted that tax reform would be enacted in the coming year. And only one in four see much hope of movement in the final years of the Obama administration. Most of the 129 tax officers surveyed either were "unsure" when legislation might advance or predicted movement only after the next presidential election.


Meanwhile, Rep. Dave Camp (R-Mich.) replaced Obama in the survey as the person who "will have the most significant impact on tax policy" in the coming year -- "likely stemming from [Obama's] lack of prioritization of tax issues," the survey says. Camp, who chairs the tax-writing House Ways and Means Committee, recently released a plan for a comprehensive tax overhaul that has won praise from analysts across the political spectrum. From Obama, it's been pretty much crickets.

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Former Playboy playmate of the year jailed over tax fraud by Frankfurt court

Swetlana Maslowskaya, 32, burst into tears at the court in Frankfurt, Germany, when she was told that she would spend a year in jail before any chance of release.
Chris Bale's insight:

German tax officials continued their clampdown on high-profile tax fraudsters this week with a court in Frankfurt ordering a former Playboy playmate of the year to be jailed for two and a half years over 1 million Euro tax fraud.


Swetlana Maslowskaya, 32, dressed in a black suit and striped shirt, burst into tears on Wednesday when she was told that she would spend a year in jail before any chance of release.


The decision to jail Maslowskaya, who was playmate of the year in 2002, came after it was discovered that she had accepted at least $2.5 million gifts from her 90-year-old lover, the German brewery heir Bruno Schubert.


This included cash sums but also cars, jewellery, exotic holidays, shopping sprees and an apartment in Salzburg which she later sold without paying tax.


Maslowskaya gave up her modelling career when she became the girlfriend of Schubert.


The Playmate met the married beer tycoon in 2004, according to Bild.


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Colorado reaps $2m in marijuana tax in one month. A model for the rest of the world ?

Colorado reaps $2m in marijuana tax in one month. A model for the rest of the world ? | Totally Tax | Scoop.it
Chris Bale's insight:

I have to say that whilst I recognise the risks of marijuana use leading to abuse of harder drugs, I have always advocated that it be legalised and taxed so that it can be controlled. I really hope that this model is followed in Europe so that the black market is wiped out and the taxes can be put to good use.


The money in Colorado is earmarked for youth prevention services, substance abuse treatment, and public health, according to a plan proposed by Colorado Governor, John Hickenlooper.


Many other US states are closely watching Colorado's figures.

Washington state is set to introduce legal sales later this year.

Most of Colorado's tax revenues came from firms around the city of Denver.


Recently, US President Barack Obama said marijuana was no more dangerous than alcohol, while cautioning both were bad decisions.

Nonetheless, he has instructed the Department of Justice to halt prosecutions of banks that do business with cannabis firms.

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Apple moved $8.9bn in profits from Australia to Ireland, report says

AFR reports the company’s earnings in Australia totalled just $88.5m last year, but $2bn of income was sent to Ireland
Chris Bale's insight:

Apple has reportedly moved $8.9bn in profits from Australia to Ireland in the past 10 years, sparking renewed calls to curb corporate tax avoidance.


The Australian Financial Review has reported that it had obtained documents from Apple Sales International, an Irish company that is at the core of Apple’s tax arrangements, which showed the company’s estimated income from 2002 to 2013. Apple reported pre-tax earnings in Australia that totalled just $88.5m last year, but sent $2bn of income to Ireland via Singapore in the same period, according to the AFR.


The shadow treasurer, Chris Bowen, said the federal government had not been doing enough to counter tax avoidance, after the Coalition announced it would not be supporting the closure of some loopholes in the banking regime.


“It’s not fair to other Australian businesses that do pay their fair share of tax if some companies are able to shift profits around to avoid tax,” he said on Thursday.

But the trade minister, Andrew Robb, defended the government, and said it was committed to closing loopholes.

“We are very strongly committed to seeking to capture that tax which has been avoided inappropriately,” he said on ABC Radio.

The finance minister, Mathias Cormann, said the government was working through the G20 to stop international tax loopholes.

“Our view is – and that is a view that is shared around the world – that business should pay their fair share of tax where they earn profits,” Cormann said.


Apple did not provide a response to questions about the story, but in a statement to a parliamentary oversight committee in April last year, Apple’s Australia vice-president, Tony King, said: “Our tax affairs in Australia are very straightforward.


“We report to the ATO all the revenue that we derive in the Australian market. We report to the ATO all the costs of doing business in the Australian market . . . We are very open with the Australian Tax Office.

“We pay our taxes when they are due, not only income tax expense but GST, ­payroll and any other tax that might be incurred in doing business in Australia.”

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New report on how Finnish multinationals use tax havens

New report on how Finnish multinationals use tax havens | Totally Tax | Scoop.it
Chris Bale's insight:

Finnwatch have just published a new report looking at the activity of Finnish multinational corporations in tax havens.


It conforms to the pattern, seen elsewhere, of large numbers of subsidiaries in tax havens  - particularly the Netherlands, Belgium and Luxembourg - as well as some good evidence on round-tripping, and on the limits of voluntary company reporting.


Statistics reveal that almost 90 percent of the direct investments from Finland to the Netherlands are done into holding companies. In practice, these investments are just bypassing the holding companies on their way to the final investment targets. The same phenomenon is repeated in the direct investments from the Netherlands to Finland - out of which more than 70 percent comes from holding companies. This is a major issue for the Finnish national economy because the Netherlands is one of its biggest trading partners.

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Irish Prime Minister defends Yahoo's move from Switzerland to Ireland. Nothing to do with the 12.5% tax rate apparently.

Irish Prime Minister defends Yahoo's move from Switzerland to Ireland. Nothing to do with the 12.5% tax rate apparently. | Totally Tax | Scoop.it
TAOISEACH Enda Kenny said in Paris that Yahoo's decision to move its data-processing operations to Ireland was a commercial decision as he again defended Ireland's tax regime.
Chris Bale's insight:
Enda Kenny said in Paris that Yahoo's decision to move its data-processing operations to Ireland was a commercial decision as he again defended Ireland's tax regime. His defence yesterday came as a senior official with the Organisation for Economic Co-operation and Development (OECD) said the global organisation was trying to close down tax loopholes, such as the 'Double Irish'.

Grace Perez-Navarro said it wasn't in Ireland's interest to allow it because the State wasn't receiving any corporate revenue from it.

Yahoo looks set to attract a privacy audit from the Irish Data Protection Commissioner after informing the watchdog that it is moving all of its data-processing facilities fromEurope to Ireland.


The internet giant, which is currently struggling with falling sales, also informed its European customers that it was increasing its Dublin workforce.

But the move has made headlines in French newspaper 'Le Monde' amid claims the decision was taken for tax reasons. It will likely cast the spotlight further on the tax regime in Ireland and multinationals.


"This is a commercial decision by Yahoo. It is not a directed decision from anybody,'' Mr Kenny said.


''We have all of these companies in Ireland and the cluster impact creates its own energy and its own dynamism and it's own structure.

"Ireland has been very forthright and very upfront about our corporate tax position."


Ms Perez-Navarro, deputy director of the OECD centre for tax policy and administration, said the OECD was trying to close down loopholes through its global tax work and attempt to increase transparency. She said the 'Double Irish' was one of the loopholes and she said the OECD was working with all countries to try to eliminate them."As you know, through the Double Irish, Ireland doesn't get any corporate revenue from that so it's not in Ireland's interests to have that,'' she said.

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IBM uses Dutch entity to boost profits as sales decline - effective tax rate of 15.6%

IBM uses Dutch entity to boost profits as sales decline - effective tax rate of 15.6% | Totally Tax | Scoop.it
International Business Machines Corp. has reduced its tax rate to a two-decade low with help from a tax strategy that sends profits through a Dutch subsidiary.
Chris Bale's insight:
IBM has reduced its tax rate to a two-decade low with help from a tax strategy that sends profits through a Dutch subsidiary.The approach, which involves routing almost all sales in Europe, the Middle East, Africa, Asia and some of the Americas through the Netherlands unit, helped IBM as it gradually reduced its tax rate over 20 years at the same time pretax income quadrupled. Then last year, the rate slid to the lowest level since at least 1994, lifting earnings above analysts’ estimates.IBM is aiming for $20 a share in adjusted earnings by 2015, up from $11.67 in 2010 -- a goal made more difficult as the company posted seven straight quarters of declining revenue. To stay on target, IBM has bought back shares, sold assets, and fired and furloughed workers. A less prominent though vital role is played by its subsidiary in the Netherlands, one of the most important havens for multinational companies looking for ways to legally reduce their tax rates.“They’ve got a lot of ways to beat earnings and they definitely take advantage of it,” said Josh Olson, an analyst at Edward Jones & Co. “It’s part of how IBM operates.”IBM ended 2013 with a tax provision $1.84 billion lower than it initially projected, thanks to a tax rate of 15.6 percent -- compared with its forecast of 25 percent. Without the lower rate, the company’s earnings per share would have fallen from the previous year instead of rising, and net income would have missed analysts’ estimates by about 14 percent instead of 2.9 percent, according to data compiled by Bloomberg.Michael Fay, a spokesman for Armonk, New York-based IBM, declined to comment on the company’s tax structure.For the full article on Bloomberg please click through.
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330 senior tax officials met this week in Paris at OECD conference to discuss Transfer Pricing

330 senior tax officials met this week in Paris at OECD conference to discuss Transfer Pricing | Totally Tax | Scoop.it

Over 330 senior tax officials from more than 110 jurisdictions and international organisations met in Paris on 26-28 March 2014 during the 3rd Annual Meeting of the Global Forum on Transfer Pricing. The meeting was especially targeted at discussing solutions to base erosion and profit shifting (BEPS) as reflected in the transfer pricing action points of the Action Plan on BEPS released in 2013. During the final day of the conference, government officials were joined by business representatives and non-governmental organisations for a meeting of the OECD Task Force on Tax and Development, a multi-stakeholder platform. Participants discussed the challenges faced by developing countries in targeting BEPS.

Chris Bale's insight:

Over 330 senior tax officials from more than 110 jurisdictions and international organisations met in Paris on 26-28 March 2014 during the 3rd Annual Meeting of the Global Forum on Transfer Pricing. The meeting was especially targeted at discussing solutions to base erosion and profit shifting (BEPS) as reflected in the transfer pricing action points of the Action Plan on BEPS released in 2013. During the final day of the conference, government officials were joined by business representatives and non-governmental organisations for a meeting of the OECD Task Force on Tax and Development, a multi-stakeholder platform. Participants discussed the challenges faced by developing countries in targeting BEPS.


In his opening address, Pascal Saint-Amans, Director of OECD’s Centre for Tax Policy and Administration, stressed the need for internationally co-ordinated action. “Global standards are needed, both to attract investment and to be able to tax the fruits of that investment.” he said.

In his opening remarks to the meeting of the Task Force on Tax and Development, Duncan Onduru, Executive Director of the Commonwealth Association of Tax Administrators (CATA) recognised that the challenges posed by BEPS may differ between countries with different levels of development. He also recognised the importance of an interactive exchange of thoughts and experiences. “You have had two days of very serious talks amongst tax mandarins. Today we welcome representatives from business and NGOs to discussions of the Task Force on Tax and Development.  While we will still be discussing serious issues, I invite you to do so with relaxed faces.” he said.


A statement of outcomes providing an overview of the the content of the discussions and conclusions reached will be issued in the coming days.

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HMRC criticised for using terror laws to investigate tax whistleblower who revealed the Goldmans Sachs 'sweetheart deal'

Public accounts committee chair says tax official's use of powers to track down journalist had 'shocked her to the bones'
Chris Bale's insight:

MPs have criticised Britain's leading tax official after HM Revenue & Customs used powers meant to catch terrorists to hunt down an employee who exposed a secret multimillion-pound "sweetheart" deal with Goldman Sachs.


Lin Homer, the chief executive of HMRC, had told the public accounts committee that phone records had been obtained using the Regulation of Investigatory Powers Act (Ripa) to unearth information about Osita Mba, an in-house lawyer with HMRC.


Margaret Hodge, the chair of the committee, said that HMRC's use of the powers, ostensibly to track down whether Mba had been talking to the Guardian's then investigations editor, David Leigh, had "shocked her to her bones".


The MP told Homer she was particularly surprised "that you made a request under Ripa, which is there to deal with terrorism". She asked for assurances that HMRC would "never again use these powers on a whistleblower".

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Luxembourg & Austria finally cave in and agree to tax transparency rules

Luxembourg & Austria finally cave in and agree to tax transparency rules | Totally Tax | Scoop.it
Countries withdraw veto against automatic exchange of account information.
Chris Bale's insight:

A five-year-long deadlock over European Union member states sharing more information on tax ended last night (20 March), as the leaders of Luxembourg and Austria, the two member states opposing the proposal, withdrew their opposition.


The progress represents an important step in efforts to build EU-wide consensus on tax transparency and the fight against tax evasion and avoidance. The agreement sends a "strong unanimous commitment to the global fight against tax evasion", said Herman Van Rompuy, the European Council's president, when announcing the news in the early hours of Friday morning (21 March). He added that "banking secrecy is set to die".


The new rules will, from 2016, increase the range of information automatically exchanged by tax authorities in the member states in relation to savings accounts. Member states already exchange tax information under a 2005 directive.

The legislation approved tonight at a summit of EU leaders in Brussels was proposed in 2008 to close loopholes in the rules.  

Luxembourg and Austria resisted the proposal because of fears that their financial sectors would be badly affected and risked losing customers to  jurisdictions with less transparency, such as Switzerland, Andorra or Lichtenstein.  

They have been able to block the deal because under EU rules each member state has a veto over legislative proposals dealing with taxation.

In order to broker a compromise, member state leaders last year asked the European Commission to negotiate similar rules with five low-tax jurisdictions on the European continent: Switzerland, Lichtenstein, Andorra, San Marino and Monaco.

These negotiations have progressed well enough for Luxembourg and Austria to drop their opposition to the deal, the two countries said today. Werner Faymann, Austria's chancellor, said: “We cannot always wait for everyone to agree, this must not be an excuse not to do anything.”

Xavier Bettel, Luxembourg's prime minister, said that his country's conditions had been met and described the deal as a “defining moment”. 

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Randolph Thrower, I.R.S. Chief Who Resisted Nixon, Dies at 100

Randolph Thrower, I.R.S. Chief Who Resisted Nixon, Dies at 100 | Totally Tax | Scoop.it
Mr. Thrower lost his job heading the Internal Revenue Service when he balked at Nixon administration efforts to punish its enemies through tax audits.
Chris Bale's insight:

One of the good guys I think....


Randolph W. Thrower, a Republican lawyer who headed the Internal Revenue Service under President Richard M. Nixon from 1969 to 1971 before losing his job for resisting White House efforts to punish its enemies through tax audits, died March 8 at his home in Atlanta. He was 100.


Though his tenure was short, he was instrumental in two historic overhauls of American tax policy: revoking the tax-exempt status of private schools that excluded blacks, and passage of the Tax Reform Act of 1969, which he helped draft. The legislation eliminated some loopholes for the rich and exempted many poor people from federal taxes altogether.


Click through to the NY Times for the full article about Mr Thrower. Worth reading.

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Interview with Algirdas Semeta, European Commissioner for taxation & customs

Algirdas Šemeta, European commissioner for taxation, customs and audit and anti-fraud, talks to European Voice about efforts to tackle tax evasion and fraud,...
Chris Bale's insight:

Algirdas Šemeta, European commissioner for taxation, customs and audit and anti-fraud, talks about efforts to tackle tax evasion and fraud, the financial transactions tax and taxing the digital economy.


He mentions that the strategy on the taxation of the digital economy will be firmed up in the summer of 2014.

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Don't neglect your tax department - interesting article by PwC's Mark Mendola on the need for tax technology

Don't neglect your tax department - interesting article by PwC's Mark Mendola on the need for tax technology | Totally Tax | Scoop.it
More than half of companies do not have a long-term plan for improving tax technology — nor any intent to develop one. That's a mistake.
Chris Bale's insight:

In a recent PwC study of tax departments, we found that tax personnel spend roughly 40 percent to 60 percent of their time on data-management tasks. Not surprisingly, a majority acknowledged they spend less than 30 percent of their time on strategic analysis.

Many CFOs historically have paid scant attention to tax as an area for improvement. Instead, they concentrate on improving their supply chain or business services functions. In addition, unlike in most other departments, little investment has been made to automate and technology-enable the tax function.

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BetOnSports founder, Gary Kaplan, ordered to pay $37million in taxes and penalties by US Tax Court

Chris Bale's insight:

Kaplan has already paid a hefty fine and served jail time. This latest news came from the US Tax Court yesterday.


Hat tip: Tony Nitti

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Is the Federal Income Tax Code Unconstitutionally Vague?

Taxes are the price of living in a civilized society and no one disputes the right of the federal government to tax income. However, the federal tax code may ha
Chris Bale's insight:

Interesting paper written by David E Vance from Rutgers University School of Business.


Here is an abstract...


Taxes are the price of living in a civilized society and no one disputes the right of the federal government to tax income. However, the federal tax code may have become so complicated that it is unconstitutionally vague. A law is unconstitutionally vague when a person of ordinary intelligence cannot determine what is required of him or her. There is a presumption that laws are constitutional and that presumption can only be rebutted by clear and convincing evidence. However, there is a broad and deep body of clear and convincing evidence that the tax code is so complex that it is unconstitutionally vague. The contribution of this article is to create a record of tax code complexity that can be used as the basis for judicial action.


Here is some of David's conclusion....


Rather than terminate the tax law’s operation immediately, courts should allow Congress a limited time to conform the code to judicial standards. The court could appoint a Special Master to work with Congress to revise the code. If Congress failed to act after some definite period, perhaps two years, the court could strike down the existing tax code as unconstitutional and empower the Special Master to implement a substitute tax code until Congress acts.

Court guidelines for a revised tax code should ban social engineering, set a strict and short limit on the length of the tax code and Treasury or IRS interpretive regulations, and limit or ban supplemental worksheets and supporting forms, eliminate alternative calculations, and limit the length of a tax return. Such reforms would restore confidence in the tax system, eliminate much of the dead loss cost of compliance with the code and might even generate more revenue for the government.


Click through to download the full paper. Hat tip Paul Caron.

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Bayern Munich football boss goes on trial for tax evasion of up to EUR18.5 million

The president of the German football club Bayern Munich has gone on trial over allegations of multi-million-euro tax evasion. Uli Hoeness was charged last ye...
Chris Bale's insight:

He faces a prison sentence if convicted, although he has already paid back all taxes he avoided.

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UK Law Society issues press release re FTT in advance of tomorrow's discussion by the Economic and Financial Affairs Council

UK Law Society issues press release re FTT in advance of tomorrow's discussion by the Economic and Financial Affairs Council

Chris Bale's insight:

Tomorrow (Tuesday), the Economic and Financial Affairs Council will discuss the proposal for an EU11 Financial Transaction Tax (FTT).


This is the first time the proposal is brought to the ministerial level and reflects the Greek presidency’s desire to make progress towards a political agreement. Law Society chief executive Desmond Hudson has therefore written to key European finance ministers to raise the Society’s concerns that the proposal does not sufficiently respect the rights and competences of the countries that have chosen not to participate.


The proposal for a FTT is designed in such a way that financial entities based in non-participating countries, such as the UK, would still be subject to the FTT for a wide range of transactions, including transactions that do not necessarily have a genuine economic link to a participating Member State.


Law Society chief executive Desmond Hudson said: "The Law Society fully respects the competence of those 11 countries that have chosen to introduce a financial transaction tax. However, regardless of the potential pros and cons of the tax, we firmly believe that any legislation should respect the EU treaties and the decision by a majority of countries not to participate. The point is that the extraterritorial effects of the proposed tax would in effect force a degree of participation on those countries."


The Law Society also has a number of technical concerns. Due to the wide scope of the proposed FTT, it is technically very complex, and it is more likely to get passed onto the end user of financial services.
Gary Richards, Chair of the Law Society's Tax Law Committee, said: “To prevent avoidance, the European Commission has proposed that in principle each leg of a transaction is subject to the tax and that each party is jointly and severally liable to pay. Essentially, this means that the costs will be much higher as is the likelihood that the tax will be passed onto non-financial parties, such as businesses, and pension savers.”


For further information, please consult the Law Society Tax Law Committee's brief which outlines the legal and practical implications of the FTT here

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OECD delivers new single global standard on automatic exchange of information

OECD delivers new single global standard on automatic exchange of information | Totally Tax | Scoop.it
Chris Bale's insight:

Responding to a mandate from G20 leaders to reinforce action against tax avoidance and evasion and inject greater trust and fairness into the international tax system, the OECD has unveiled today a new single global standard for the automatic exchange of information between tax authorities worldwide.

 

Developed by the OECD together with G20 countries, the standard calls on jurisdictions to obtain information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. 

 

The OECD will formally present the standard for the endorsement of G20 finance ministers during a 22-23 February meeting  in Sydney, Australia. The G20 invited the OECD to develop a global standard on automatic exchange of information in 2013, and remains the driving force behind the move toward greater tax transparency worldwide.

 

Presenting the new standard, OECD Secretary-General Angel Gurría said: "This is a real game changer. Globalisation of the world's financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence. This new standard on automatic exchange of information will ramp up international tax co-operation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion."


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Did you know ? The US has the highest marginal effective tax rate in the OECD and has done since 2007

Did you know ? The US has the highest marginal effective tax rate in the OECD and has done since 2007 | Totally Tax | Scoop.it

Interesting report from the Tax Foundation regarding the effective tax rate in the US

Chris Bale's insight:

Here are the key points from the report - click through for evidence and further details:


  • The marginal effective tax rate (METR) on corporate investment (i.e., the tax impact on capital investment as a portion of the cost of capital) is 35.3 percent in the U.S.—higher than in any other developed country.
  • The U.S. has maintained the highest METR in the OECD since 2007, when Canada’s multiyear program of corporate tax reform brought its METR below the G-7 average.
  • Nonetheless, the White House and Treasury Department continue to assert that the U.S. has a lower METR than Canada by failing to properly account for sales and property taxes.
  • The U.S. METR varies by industry, from 26.7 percent for transportation to 39.3 percent for communications.
  • The U.S. average effective tax rate on corporations (AETR) is irregular from year to year due to the complexity and instability of the corporate tax code.
  • Excessively high U.S. corporate tax rates have shrunk the U.S. corporate sector and reduced corporate tax revenues. 
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