The Swiss Government has invested a lot of energy and political capital into its efforts to make the Swiss corporate tax regime more internationally acceptable at the same time as appealing. But unlike the vast majority of other countries – perhaps unlike all other countries – on this matter it is answerable not only to parliament, but to the people.
Given recent events, referendums tend to mean one thing for governments, and that’s trouble. The less said about Brexit the better. But Switzerland has had a rather unhappy experience with referendums in the not-so-distant past too. The Government’s previous corporate tax reform legislation, CTR III, was shot down at the last hurdle in a referendum, and the recent news that the reforms proposed as a replacement to CTR III will also be subjected to a public vote couldn’t have filled the Government with … Read More »
Can anything good really come from referendums? It’s the purest form of democracy, but recent history suggests such plebiscites can be more of a hindrance than a help. Enough said about the UK already. But it’s worth remembering how the Irish didn’t vote the way they were supposed to on the Lisbon Treaty back in 2007. Rather embarrassingly for all concerned, Ireland had to go back to the polls until it put enough crosses in the right box.
The Swiss of course love a referendum. It’s ingrained into their unique system of direct democracy. But where taxation is concerned, this system is causing the government a bit of grief. Switzerland is considered a pariah state by some of the world’s anti-avoidance and transparency campaigners. As such, it needs quite urgently to change its corporate tax regime. This is not only to … Read More »
Nike is the latest multinational company to become embroiled in the European Commission’s tax ruling/transfer pricing/state aid investigations. It’s probably unlikely to be the last, either.
It’s my view these investigations aren’t about upholding the state aid rules. They’re about the EU being seen to be doing something about corporate tax avoidance. Because the trouble is it’s highly likely that the tax arrangements in question are perfectly above board. So it’s on shaky legal ground from the off.
For the EU, the probes will have likely damaged its reputation as a place to do business, as for businesses the impact of these cases is less to do with tax breaks and tax avoidance as to do with tax certainty. While we can argue all year long about the rights and wrongs of corporate tax planning, corporations like to know not only what’s … Read More »
Canada has been studying the US tax reforms and their potential impact on the Canadian business environment, economy, and investment since the start of the year. This indicates that it is clearly worried about the possible erosive effect they will have on Canada’s competitiveness.
However, while it was never likely that a Canadian Government that has accorded a high priority to tax fairness was going to match the US corporate tax cut dollar for dollar, business will be forgiven for not getting very excited about the outcome of the Finance Department’s review: new write-off incentives and an investment incentive.
Under the proposals, the Government will allow the full cost of machinery and equipment used in the manufacturing and processing of goods to be written off immediately for tax purposes. Immediate expensing will apply to qualifying assets acquired after November 20, 2018. It … Read More »
According to a recent ruling by Estonia’s Supreme Court, the country’s tax agency can no longer chase up tax debts that are owed five years after enforcement proceedings are initiated. Well, it’s a good job that tax debts aren’t waived so quickly in many other jurisdictions, given the often protracted nature of tax audits and investigations.
It emerged just last week that the average length of tax inquiries into large businesses in the United Kingdom are now taking more than three years to settle, with each case taking around 39 months to resolve in 2017/18, up from 34 months in 2016/17, according to Pinsent Masons, the law firm. Of course, this isn’t just hard luck for the tax authority. It’s very unfortunate for the businesses facing these interminably long investigative proceedings too.
As Pinsent Masons pointed out, these matters are not only … Read More »
A few years ago, the Swiss Government put many of its eggs into a corporate tax reform basket called Corporate Tax Reform III (incidentally, does anyone remember Corporate Tax Reform I or II? Is this a rare case of a sequel being more memorable than the original?). These are intended to remove a series of “harmful” tax regimes and generally bring Switzerland’s tax regime into line with international tax standards, while also ensuring the country remains competitive on tax. However, the proposals were somewhat cruelly struck down at the very last legislative hurdle as the people voted against them in a referendum.
Fearing the wrath of the European Union and yet another reputational battering, the Swiss Government had little choice but to almost immediately pick itself up, dust itself down, and start writing the script for CTR IV, which eventually became … Read More »
Profound changes are afoot generally, both politically and technologically. However, it’s good to know that beneath the quaking and shaking, it’s business as usual. And there’s nothing like a good transfer pricing development to distract you from the turbulence and turmoil generated at government level in various places.
In Italy, for example, we can forget for a moment the uncertainty caused by the recent election of the most unlikeliest of coalition arrangements and instead get our teeth into “Provvedimento 108954/2018,” setting out how Italian companies can request a “downward adjustment” to their taxable income in Italy following a transfer pricing adjustment in another territory, to avoid double taxation. If that doesn’t take your fancy, then there’s always the Ministry of Finance’s consultation on whether to support the EU’s digital tax plans, and in particular, its proposal for an “interim tax” on … Read More »
US tax reforms are causing a certain amount of competitive anxiety in some of world’s major economies, especially in Canada, given that its geographical proximity to the US makes it doubly vulnerable to such competitive pressures. And the results of the International Monetary Fund’s latest assessment of the Canadian economy will have done nothing to assuage these concerns.
Often, the IMF’s messages get lost behind a thick fog of economic jargon. But in this case its conclusions were quite clear. Its staffers wrote of “economic anxiety,” of Canada as “a less attractive destination for investment,” of substantial “shifting of real activity and profit,” and of the need for a “careful rethink of Canadian tax policy.”
Surveys suggest that businesses on the ground in Canada are growing increasingly worried about the future too, due largely to the tax and trade policies of the US. … Read More »
The Australia Institute recently urged the Government to resist partaking in the ”race to the bottom” on corporate tax rates. Instead, it recommended that Australia tackle tax loopholes and avoidance schemes, arguing that the priority is to ensure enough revenue is raised to fund public services and infrastructure. But if you look around the world, you’ll find that parliaments are voting through tax reforms that do both – cut corporate tax while shoring up the corporate tax base.
It’s no coincidence that in recent times a succession of governments have announced, are legislating for, or have completed, tax reforms which reduce the rate of corporate tax while restricting interest deductions and strengthening controlled foreign company regimes, among other anti-avoidance measures. These moves are largely a response to base erosion and profit shifting (BEPS), but they also show that tax competition is far from … Read More »
In the bizarre and esoteric world of taxation, something good – say a 14 percent corporate tax cut – can also be something bad. Just ask the string of companies which have reported multi-billion-dollar hits to their fourth-quarter and full-year 2017 results because of the accounting effects of the United States Tax Cuts and Jobs Act. AIG and GM, for example, reported one-off accounting charges totaling approximately USD14bn last week, taking both companies into the red.
Indeed, in this topsy-turvy world, something you’d think under normal circumstances would be undesirable, like a financial loss, actually becomes an asset. In this case, the ability to use past losses to offset future income, thus enabling the taxpayer to pay less tax. And, as if to underline the point that there’s rarely anything straightforward where taxation is concerned, the value of these deferred tax … Read More »