Business Taxation

Un plomb de fabrique médiéval de Tolosa

by Michel Feugère

M. Feugère, Un plomb de fabrique médiéval de Tolosa. L’Auta 4e série, n°11, mars 2000, 71-75.

A Discourse on the Discordant State of Collecting Domestic Digital Duties

by Daniel Kent

July 2011

Current statutes taxing inter-state e-commerce are facially unconstitutional because they violate the Commerce... more
Current statutes taxing inter-state e-commerce are facially unconstitutional because they violate the Commerce Clause by creating serious burdens on interstate commerce through
requiring foreign corporations to collect sales taxes on e-commerce regardless of whether they have a substantial nexus within the taxing states and violate Federal Legislation.  State and Federal courts across the country have come to different conclusions regarding this topic.  Congress has not yet resolved this public policy issue in part because technology has been
moving faster than legislation has been enacted.  As a result of the recent economic downturn and states’ fiscal duress, this matter's significance is increasing as more states enact legislation that tax inter-state e-commerce.  An equitable remedy is warranted for all unconstitutional duties that harm taxpayers and litigation including class action suits by consumers and
merchants may be used as a strategy to resolve and obtain redress in the future.  Should states be required to refund duties paid by businesses or taxpayers, these governments must adhere to the doctrines of prospective retroactivity.  In the event that states are deemed liable to refund these unconstitutional state taxes, the liabilities will further exacerbate some states’
fiscal condition

The Regulation of Corporate Groups: Can Tax Help with Regulation?

by Miguel Correia

This paper proposes that the corporation income tax (“CIT”) contributes, and may contribute more effectively, to the... more This paper proposes that the corporation income tax (“CIT”) contributes, and may contribute more effectively, to the regulation of corporate groups. The paper is divided in two parts. In the first part, the paper will argue that a CIT system contributes to the regulation of corporate groups by minimizing the firm’s agency problems, and by limiting and controlling managerial power. In the second part, the paper will discuss how a CIT system may be improved so that it may contribute more effectively to their regulation. The paper will argue that in a second best world, i.e., CIT’s world, pure efficiency and regulatory considerations should guide tax intervention. The policy principle proposed is that, absent agency problems and other market failures, transaction costs and other sources of deadweight loss  should be reduced as much as possible. Thus, the reduction or elimination of specific transaction costs and other sources of deadweight loss should be pursued only when such reduction or elimination does not adversely influence the CIT’s regulatory functions. Otherwise, the specific aspects of the CIT system under consideration may often be better maintained. By following this policy approach, the CIT should be actively contributing for a better regulatory environment in the corporate sector.

The Living Economy Elaborated and with Examples

by Damir Ibrisimovic

Draft 1.1

Tax Havens—Feasibility of Continuance of Evasive Measures within the Indian Legal Framework

by Debadyuti Banerjee

Co-authored with Arunabha Banerjee, fellow colleague at the National Universty of Jodhpur.
Published in the Journal of INTERNATIONAL TAXATION (2010).
The link is to a blurb of the journal showing the title of the paper

Today’s world is no stranger to corporate vehicles being strategically used to alter the fiscal nature of the... more Today’s world is no stranger to corporate vehicles being strategically used to alter the fiscal nature of the transaction in an attempt to evade taxes. The discourses on this contentious issue has gained considerable momentum ever since the Vodafone Tax controversy came into prominence, over a high profile deal, where Hutchison Essar India’s stakes were sold to Vodafone through an alleged vehicle set up in Mauritius in the form of an investment company. The decision of the Indian Revenue Administration to levy tax on the ground of gain from the sale of capital assets under Section 9 of the Income Tax Act, 1961 sparked intense debates as to whether the tax net shall be attracted in such cases. The matter at present appears to be heading towards a long and winding path of complex litigations as both procedural and substantive issues have come to the forefront in the wake of this controversy—the major debatable point being the legitimacy of eye-wash mechanisms being employed in tax havens to facilitate the transactions. Such a conduit or paper company merely enjoys a formal existence and is in no way connected with the real market where the substantial part of the business happens. If such tendencies are encouraged, the tax havens and the Double Tax Avoidance Agreements (DTAA’s) are bound to be subject to rampant misuse. Moving away from the capital transactions to the realm of short term investments routed through the Foreign Institutional Investors (FII’s), the problem surfaces yet again. Due to the inadequacy of the tracking mechanisms of Securities Exchange Board of India (SEBI), the incidence of unaccounted money pouring into the Indian market has increased at an alarming rate. The true identity of the real investor often remains veiled and this creates serious impediments for the revenue authorities to carry out a proper assessment. The transfer pricing provisions inducted into the Income Tax Act, 1961 as a separate chapter for nearly a decade now, lacks sufficient teeth to empower the Transfer Pricing Officer (TPO) to correctly assess the nature of the transaction or transacting parties to ascertain whether the parties can be deemed to be operating at arm’s length and accordingly compute the income there from. In most cases the process has been reduced to a mechanical exercise and procedural flaws continue to plague the whole system of reference to the TPO by the Assessing Officer (AO). The proposed paper seeks to analyze the prospects of allowing the continuance of such evasive practices within the Indian legal framework itself, especially since India is gearing up to be counted amongst the top five economies of the world. It therefore becomes pertinent for the purpose of this research to scrutinize these areas of concern in light of relevant international developments and in the process conceptualize an effective remedial mechanism for the same.
An in-depth discourse in this regard would necessarily involve some time being spent on expositing the definition and associated workings of tax havens.

Taxation, Property and Market: The Case of the Corporation Income Tax

by Miguel Correia

Working Paper Católica Global School of Law

This paper builds on the insight that there is a profound interconnection between taxation, property, and the market... more This paper builds on the insight that there is a profound interconnection between taxation, property, and the market by analyzing the nature of these interrelationships in the context of a corporation income tax (CIT). The study adopts the United States Federal CIT system as the standard model of corporate income taxation. The paper argues that, due to the nature of these interrelationships, the design and operation of a CIT system is subject to several constraints and distortions, and proposes that to simply look at how far a certain policy is from optimality may be insufficient to determine whether an incremental improvement occurs. The study proposes a new approach to CIT policy whereby the pursuit of incremental improvements requires the minimization of transaction costs and other sources of deadweight loss and the taking into account of the collateral effects of a CIT system, including its interaction with market imperfections, the behavioural and operational nature of business entities, its interaction with related regulatory fields, and its political significance.