Global Tax Reform is back — at least heightened discussion of it on both sides of the Atlantic.
Both the U.S. and the EU are grappling with revising their provisions concerning international taxation. There is a growing consensus that national austerity policies are inconsistent with multinationals sheltering billions of dollars offshore. The EU is considering adoption of U.S.-style international taxation to capture capital in offshore tax havens. This includes greater disclosure of data and customer identification.
The U.S. is considering revision of its tax laws especially concerning overseas income, repatriation of foreign profits, transfer-pricing, tax credits, tax treaties and even unitary taxation.
Apple’s massive bond issue borrowing $17 billion to pay stock dividends (return of profits to its shareholders) instead of using its offshore billions of retained earnings ($145 billion) seems to be about the last straw. It’s about time. In fact, serious discussion of global tax reform by countries worldwide is long-overdue. It’s now just starting in earnest. National taxation of global and cross-border transactions as it is today is simply not working. We need better tax policies globally.
Here are some updates:
….The EU is considering moving more aggressively against tax havens perhaps along the lines of the U.S. “Foreign Account Tax Compliance Act” (FATCA). This issue will be discussed at the upcoming G-20 meeting and the European Union Summit. “Support Grows for European Efforts to Fight Tax Havens.” New York Times (April 15, 2013). See also, “Apple, Dividends and Offshore Earnings.” New York Times (5.3.13) discussing Europeans adopting greater offshore tax legislation along the lines of the U.S. adoption of the Foreign Corrupt Practices Act [FCPA] that was followed by nations worldwide).
….The Financial Times Series entitled “Global Tax” discusses the building global resentment over billions of dollars of tax avoidance by multinational corporations in the context of national austerity policies. The FT discusses the building demand for global reform of international business taxation. This demand is spurred on by various countries, the G-20 and the OECD. The OECD has termed the current situation a “race to the bottom.” But countries are now on the defensive in granting tax breaks to the multinationals. “Nations on Defensive as Anger Grows Over Tax Avoidance.” Financial Times (April 29, 2013). This series includes a good global interactive map of corporate tax rates and % of GDP. This series examines EU tax havens such as Holland and Luxembourg.
…. Excellent overview of problems taxing multinational corporations and how aggressive they have become in reducing their tax burden over last 20 years. “Tax Burden Isn’t What It Used To Be.” Washington Post (March 23, 2013). This article discusses the MNC intra-group short-term loans as a primary use of offshore monies and raises the issue of repatriation. “How Firms Tap Overseas Cash.” Wall Street Journal (March 29, 2013). Excellent article discussing offshore tax havens. “Piercing the Secrecy of Offshore Tax Havens.” Washington Post (April 6, 2013) (review of massive data).
…. Good op /ed on reforming multinational corporate taxation on a multilateral level via the G-20 and the OECD. “Op / Ed — Statement by European Finance Ministers.” Financial Times (Feb. 16, 2013). The G-20 has concluded recently the need to be careful about monetary policy and currency devaluation while calling for more actions concerning global taxation. “Group of 20 Vows Markets Set Currency Rates.“ New York Times (Feb. 17, 2013).