Tax Risk Management

Low Tax Jurisdictions Are The TARGET Of Blacklisting By Tax Authorities

It is well understood, among tax professionals, that tax avoidance is not synonymous to tax evasion. Somehow, these two concepts are pejoratively being used synonymously. For refresher, each of these concepts are diametrically on opposite sides of the legal spectrum - - one concept is legally acceptable while the other concept is not. Tax avoidance is a practice of using legal means to pay the least amount of tax possible. This is different from tax evasion which is the practice of using illegal methods to avoid paying tax. Tax evasion frequently involves contrived, artificial transactions that serve no purpose other than to reduce tax liability. With this understanding, why are low-tax jurisdictions being blacklisted? The response to this inquiry may seems simplistic but in the overall scheme, the question is far overreaching than the mere simplistic answer. Low-tax jurisdictions are inherently believed to inhibit tax avoidance by allowing tax payers to engage in tax schemes that lower their tax liabilities.

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Profit split method

The Profit Split Method is arguably the method likely to give most complete answer as to arm’s length pricing provided the activities performed by the taxpayer and its associated enterprises are inextricably linked and both entities contribute to the value chain. Unlike other methods, it is less susceptible to leave one party with an outcome that may be non-arm's length.

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CODIFYING THE ECONOMIC SUBSTANCE DOCTRINE: Giving an Agency an Enormous Power that Corrupts.

Tax avoidance, by its definition, is an oxymoron. Often times, there is an indicia of illegal overtone, albeit, legal. Tax avoidance is the reduction of tax liability by legal means. It often has pejorative overtones, where for example it is used to describe avoidance achieved by artificial arrangements of personal or business affairs to take advantage of loopholes, anomalies or other deficiencies of tax law.

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THE IMPORTANCE OF A TRANSFER PRICING PROFESSIONAL

  A transfer pricing professional provides significant value for clients in three distinct ways: 1) ensure compliance with transfer pricing guidelines, 2) provide guidance in planning and optimizing transfer pricing…

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