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Corporate tax as % of USA tax revenue 32% (1952)9.9% (2013) Corporate Tax Rate Switzerland 17.9% USA 35% Amount US MNCs avoid paying in taxes through tax.

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Presentation on theme: "Corporate tax as % of USA tax revenue 32% (1952)9.9% (2013) Corporate Tax Rate Switzerland 17.9% USA 35% Amount US MNCs avoid paying in taxes through tax."— Presentation transcript:

1 Corporate tax as % of USA tax revenue 32% (1952)9.9% (2013) Corporate Tax Rate Switzerland 17.9% USA 35% Amount US MNCs avoid paying in taxes through tax havens 90 billion/year Oksana Korotka

2 Subpart F (Internal Revenue Code)1962 U.S. MNCs are taxed on their worldwide earnings… when earnings are brought back (“repatriated”) to the United States (IRC) FATCA (Foreign Account Tax Compliance Act) 2010 deals with the U.S. taxation on amounts earned by controlled foreign corporations; provides that certain types of income of CFCs must be included in the gross income of the U.S. shareholder in the year the income is earned by the CFC. FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts and obliges foreign banks to report to IRS (break secrecy) information on American account holders or face 30% payment withhold from US sources.

3 “Check the Box Rule” (IRS form 8832) Active Financing Exceptions (1997) IRC § 954 “Look-through Rules” (2006) exceptions to Subpart F -permits MNCs to transform their foreign subsidiary into hybrid entity recognized as corporation in only one tax jurisdiction (“haven”) -US parent can become DRE - branch of CFC -makes exception by excluding rents and royalties earned by offshore CFC from taxable passive income -allows “deferral” of taxation on income earned abroad - enables creation of “stateless income”

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5 Expansion of corporate tax base Reduction of corporate tax rate Closing the loopholes in legislation Elimination of numerous deductions (tax expenditures) applicable to corporate taxable profits (depreciation, interest payment, special credits ) Incentivizing corporations to pay lower tax at home and attract foreign MNCs Repeal of “check the box”, “look through” exceptions to Subpart F and tax Code

6 Slide 1: http://www.tradingeconomics.com/switzerland/corporate-tax-rate Corporate Tax Rates Statistics http://www.tradingeconomics.com/switzerland/corporate-tax-rate https://www.fas.org/sgp/crs/misc/R42726.pdf Congressional Research Services on Corporate Tax Reform Options https://www.fas.org/sgp/crs/misc/R42726.pdf http://www.taxjusticeblog.org/archive/2015/01/congress_should_pass_the_stop.php#.VScE3BM-9Zk Bill proposed by Congress to combat Tax Havens abuse http://www.taxjusticeblog.org/archive/2015/01/congress_should_pass_the_stop.php#.VScE3BM-9Zk http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bank-Secrecy-Act IRS Bank Secrecy Act http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bank-Secrecy-Act Slide 2: https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-N/part-III/subpart-F Subpart F text (Cornell University) https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-N/part-III/subpart-F http://www.irs.gov/irm/part4/irm_04-061-007.html#d0e10 Tax Code Subpart F CFCs http://www.irs.gov/irm/part4/irm_04-061-007.html#d0e10 http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA IRS FATCA Text http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA Slide 3: http://s3.epi.org/files/2014/how-to-tax-multinational-corporations.pdf Economic Policy Institute- Proposal of Corporate Tax Policy http://s3.epi.org/files/2014/how-to-tax-multinational-corporations.pdf https://www.law.cornell.edu/uscode/text/26/954 Tax Code Foreign Based Companies (Cornell University) https://www.law.cornell.edu/uscode/text/26/954 https://www.youtube.com/watch?v=NxezUBlBE-w “60 Minutes Tax Havens” https://www.youtube.com/watch?v=NxezUBlBE-w Slide 4: http://s3.epi.org/files/2014/how-to-tax-multinational-corporations.pdf Economic Policy Institute- Taxing International Corporations http://s3.epi.org/files/2014/how-to-tax-multinational-corporations.pdf http://ctj.org/ctjreports/2014/05/ Citizen for tax Justice- 12 ax havens http://ctj.org/ctjreports/2014/05/ http://www.dollarsandsense.org/archives/2015/0115miller.html Dollar&Sence- Lower Tax Rates http://www.dollarsandsense.org/archives/2015/0115miller.html http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS World Bank -Tax Revenue Statistics http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx Corporate Tax rates Statistics http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx https://stats.oecd.org/Index.aspx?DataSetCode=REV# OECD official revenue statistics compared by country https://stats.oecd.org/Index.aspx?DataSetCode=REV# https://www.reit.com/sites/default/files/media/Files/Policy/Corporate-Tax-Reform-9-13-12.pdf Congressional research Services “Corporate Tax System…” https://www.reit.com/sites/default/files/media/Files/Policy/Corporate-Tax-Reform-9-13-12.pdf Slide 5: http://taxfoundation.org/blog/canadas-lower-corporate-tax-rate-raises-more-tax-revenue Canada’s Lower Corporate Tax Rate raises more revenue- Tax Foundation http://taxfoundation.org/blog/canadas-lower-corporate-tax-rate-raises-more-tax-revenue https://www.fas.org/sgp/crs/misc/R42726.pdf Congressional research Services “Corporate Tax System…” https://www.fas.org/sgp/crs/misc/R42726.pdf http://www.americansfortaxfairness.org/files/ATF-Offshore-Corporate-Tax-Loopholes-Fact-Sheet.pdf Offshore Corporate Tax Loopholes http://ctj.org/ctjreports/2012/08/dont_renew_the_offshore_tax_loopholes.php#.VShHBRM-9Zk CTJ- Don’t Renew Corporate Offshore Tax Loopholes http://www.americansfortaxfairness.org/files/ATF-Offshore-Corporate-Tax-Loopholes-Fact-Sheet.pdfhttp://ctj.org/ctjreports/2012/08/dont_renew_the_offshore_tax_loopholes.php#.VShHBRM-9Zk

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