IT Lecture week 1 – Introduction and Overview
Table of Contents
Also on YOU TUBE: https://www.youtube.com/watch?v=osqpnK2vSkc
SEE summary of lecture below:
see the new curriculum here: http://iitfconnect.com/?p=1327 – containing details of the course/lecture dates, assignments and tutorials, with links to all the reading materials required.
INDEX TO ALL course reading materials per LECTURE, with hyperlinks to download: New IT Course Web Addresses Index
Lecture 1 presentation slides: IT course 2018 Lecture 1 vr2
Follow curriculum – Reading:
International Tax Primer 3rd Edition Brian Arnold – eBook – Chapter 1
1 Bluebook Citation Form – read for tutorial
1 Reading cases SSRN-id1160925 – read for tutorial
14 16 2018 Anti abuse legislation The Importance of Substance in a Private Equity Fund Context – a good summary of current international tax avoidance issues
1 INTERNATIONAL OFFSHORE FINANCIAL CENTERS (IOFCs) planning checklist – read for tutorial
1 International Tax – When countries go rogue – Tax Planning International Review – read for tutorial – SEE summary versions here: http://iitfconnect.com/?p=1164
1 Jus Cogens or peremptory international norms eg. unjust enrichment – Max Plank – read for tutorial
Victor Thuronyi Comparative Tax Law – this is a GREAT general book on International Tax and the legal framework applicable, especially:
1.3 Legal Families, page 7
4.1 Tax Law and part of the Legal System, page 60
4.3.2 Principle of Legality, page 70
4.3.3 General Limits on Taxing Power, page 72
4.3.6 Nonretroactivity, page 76
4.5.1 Scope of Treaties, page 111
4.5.2 Domestic effect, page 112
4.5.3 Interpretation of Treaties, page 115
4.6 Administrative Law, page 121
5.6 Sham transactions, page 157
5.7 General Anti-Avoidance, 160
Additional supplementary reading:
Basic International Taxation Vol I by Roy Rohatgi – eBook – Chapters 1, 3, 4, 5, 6 & 7 – but as indicated in the lecture and lecture ppt slides
Tutorial and assignment questions, dates and requirements:
http://iitfconnect.com/?p=902
Summary of Lecture 1 by Nataly Marchbanks, 2018:
LECTURE 1: INTRODUCTION AND OVERVIEW (2 -page summary of lecture and material)
Understanding International tax planning & the role of tax advisors
- In order to be a good international tax advisor, you need to understand the environment of international tax and what the key elements are for International Tax.
What is international tax?
- These are the global tax rules that apply to transactions between two or more countries in the world.
- It encompasses all the tax issues that arise under a country’s tax law and includes an element of foreign elements too.
- Taxes are not international and there is no global tax law that governs cross-border transactions, neither is there an international tax court or administration body for international tax issues.
- It supports domestic tax objectives in that it:
- ensures it promotes fairness by imposing tax burdens on domestic and foreign taxpayers equally regardless of the source of the income;
- enhances domestic competitiveness; and
- a country obtains its fair share of revenue form cross-border transactions.
What are the tax conflicts with reference to double taxation?
Even though international taxation supports domestic tax objectives, each country has its own taxing rights under domestic tax law where a taxpayer engaging in cross-border transactions in more than one jurisdiction, could potentially end up being taxed in their resident country as well as the country that the cross-border transaction was engaged in.
This could lead to a taxpayer being double taxed due to the conflict of taxing rights. There are two types of double taxation:
- Economic taxation
This is when the same economic transaction is taxed in two or more states at the same period BUT in the hands of two different taxpayers.
- Juridical taxation
Two or more states levy their taxes on the same entity or individual on the same income at identical periods.
In order to mitigate this, many countries, provide unilateral relief to avoid or minimise double taxation under their domestic laws. Such relief is often times seen via a tax exemption or a tax credit. As per the lecture Professor Erasmus makes mention of USA and Zimbabwe as countries for the various scenarios by explaining that a DTA can eliminate the double taxation or in some instances there is no tax payable at all.
Double Tax Treaties is a key element of International Taxation
Generally, DTAs avoid and reduce the burden of juridical taxation in two or more states. This is done by conferring the rights and imposes the obligation on the Contracting States. This is to limit the taxes that can be levied by the Contracting States under domestic law. The taxing rights are allocated under this contractual agreement and then requires the residence Contracting State to grants double tax relief if it arises.
Various of other aspects are present in a DTA such at the competent authority to resolve international tax differences, Mutual Agreement Procedures how to go about to resolve a dispute and lastly there is the exchange of information between tax authorities as well.
Can Tax treaties override domestic tax system?
Generally, the answer is no, however this depends heavily on how treaties are integrated into domestic tax law. There are three ways the legal effect can impact a country’s domestic namely:
- Automatic integration;
- Formal incorporation; and
- The substantive approach.
There is an IOFC checklist for when companies perform their tax planning and structuring
The OECD defines what a tax haven is, these are jurisdictions that usually impose low to now taxes and perceived to be used by non-residents to escape taxes in their country of residence.
Anti-avoidance measures
The observation arises that taxpayers make improper use of tax treaties by interpreting in a narrow technical way the treaty, to obtain the benefits.
Improper use of treaties is a concern.
There are specific approaches to prevent the improper use of tax treaties by introducing anti-avoidance rules in their domestic legislation and various doctrines etc.