Tax havens & of cs

Tax havens & of cs

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  Tax Havens &OFCs DR RAJU INDUKOORI
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  Taxation Methods & Approaches World wide Approach  Territorial taxation approach  Re invoicing Canters.  Tax Havens  Offshore Financial Centres (OFCs) 2
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  World Wide Approach Irrespective of origin of the company and origin of the income, government taxes all sources of corporate income  US has world wide approach  India is also close to WW approach, only exemption is it doesn’t charge its NRIs income. 3
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  Territorial Approach Local Incomeof  Non Resident  Resident Citizens  Resident foreigners Foreign Income of  Non Resident  Resident Citizens  Resident foreigners Tax is exempted or it varies based on the following areas 4
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  Re invoicing Center A subsidiary or department of a multinational corporation where all intrafirm transactions are centralized and foreign currency related receivables and liabilities are netted.  The means of hedging the entire multinational firm's foreign currency exposures are also determined by the re-invoicing centre.  Limit the firm’s to transaction exposure. 5
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  Tax Havens 6
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  Tax Havens  Lawsand other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions.  Existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance. 7
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  Tax Havens Organisation forEconomic Co-operation and Development (OECD) identified 3 key factors to consider as tax haven. 1. No or only nominal taxes 2. Protection of personal financial information 3. Lack of transparency 8
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  1) No oronly nominal taxes Tax havens impose no or only nominal taxes (generally or in special circumstances) and offer themselves, or are perceived to offer themselves, as a place to be used by non- residents to escape high taxes in their country of residence. 9
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  2) Protection ofpersonal financial information  They have laws or administrative practices under which businesses and individuals can benefit from strict rules and other protections against scrutiny by foreign tax authorities.  This prevents the transmittance of information about taxpayers who are benefiting from the low tax jurisdiction. 10
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  3) Lack oftransparency  Lack of transparency in one country can make it difficult, if not impossible, for other tax authorities to apply their laws effectively.  ‘Secret rulings’, negotiated tax rates, or other practices that fail to apply the law openly and consistently.  Limited regulatory supervision or a government’s lack of legal access to financial records are contributing factors. 11
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  Examples Sovereign 1) Luxembourg 2) Switzerland 3)Netherlands 4) United States Non Sovereign British 1) Jersy 2) Isle of Man 3) Bermuda 4) British Virgin Islands 5) Cayman Islands United States of America 1) Delaware 2) Puerto Rico 12
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  OFCs 13
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  Off Shore FinanceCenter (OFC)  International Monetary Fund (IMF) defines an offshore financial centre as "a country or jurisdiction that provides financial services to non- residents on a scale that is incommensurate with the size and the financing of its domestic economy.  It is a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds. The term was coined in the 1980s. 14
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  Off Shore FinanceCenter (OFC)  OFC play a legitimate and integral role in international finance and trade, and that their zero-tax structure allows financial planning and risk management and makes possible some of the cross-border vehicles necessary for global trade  Overseas Private Investment Corporation (OPIC), a U.S. government agency, when lending into countries with underdeveloped corporate law, often requires the borrower to form an offshore vehicle to facilitate the loan financing. 15
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  Off Shore FinanceCenter (OFC)  Have low burden of regulation  give the synergies of tax havens  Provide high confidentiality  Act as conduits for global trade and ease international capital flows. 16
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  Off Shore FinanceStructures Off shore company Offshore partnership Offshore trust Private foundation 17
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  OFC Verticals  Shipand Aircraft Registrations  Insurance  Collective Investment Vehicles  Banking 18
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  OFC s  Bahamas Bermuda  British Virgin Islands  Cayman Islands  Dominica  Jersey  Luxembourg  Mauritius  Panama  New Zealand  Switzerland 19
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  Thank You DROP YOURQUESTIONS IN COMMENTS. YOUTUBE : PROFESSOR RAJU