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Articles 1 - 30 of 31
Full-Text Articles in Tax Law
I Got 99 Problems And They’Re All Fatca, Nirav (Jonathan) Dhanawade
I Got 99 Problems And They’Re All Fatca, Nirav (Jonathan) Dhanawade
Northwestern Journal of International Law & Business
Offshore personal income tax evasion accounts for approximately $50 billion in annual lost revenue for the United States. These large sums of money are squirrelled away in tax havens—jurisdictions, such as Aruba, the Cayman Islands, and Dubai, whose laws allow some U.S. citizens to evade paying their U.S. income taxes. Before the Foreign Account Tax Compliance Act (FATCA) was enacted, U.S. citizens could avoid taxes on passive income by not reporting this income to the Internal Revenue Service (IRS). To detect tax evasion, the IRS pursued U.S. citizens with undeclared assets in foreign banks. But the IRS’s quest was largely …
Is Latin American Taxation Policy Appropriate For Promoting Foreign Direct Investment In The Region?, Hugo A. Hurtado
Is Latin American Taxation Policy Appropriate For Promoting Foreign Direct Investment In The Region?, Hugo A. Hurtado
Northwestern Journal of International Law & Business
The purpose of this article is to analyze whether the international tax policy adopted by different Latin American countries is the most appropriate for promoting foreign direct investment and what measures can be adopted by these countries in order to improve such policy. I conclude that an integrated international tax policy would promote greater FDI in the region. To achieve this goal, an analysis of the appropriate tax policy must be delivered to a multidisciplinary body with a presence in the whole region that is able to interact with scholars, private practitioners, and treasury ministries to exchange ideas and adapt …
U.S. International Tax System At A Crossroads, Barbara Angus, Tom Neubig, Eric Solomon, Mark Weinberger
U.S. International Tax System At A Crossroads, Barbara Angus, Tom Neubig, Eric Solomon, Mark Weinberger
Northwestern Journal of International Law & Business
The current U.S. international tax system, the administration's international tax proposals, and other potential international tax reforms all have ramifications for U.S. businesses, American workers, and the U.S. economy that must be fully discussed and understood. This report focuses on some of the most important facts and perspectives that should be considered as part of that discussion. This process starts by asking, at a minimum, questions like these: (1) How have the dynamics of the global economy changed? (2) What role should differences between the U.S. tax system and those of other countries play in determining an advantageous international tax …
Transfer Pricing And Fin 48: Removing Uncertainty Through The Advanced Pricing Agreement Process, Christopher Capuzzi
Transfer Pricing And Fin 48: Removing Uncertainty Through The Advanced Pricing Agreement Process, Christopher Capuzzi
Northwestern Journal of International Law & Business
The increasing globalization of companies is indisputable, and the multinational enterprise offers many heuristic challenges. Among these are jurisdiction-specific taxation and accounting standards and principles. Enterprises often operate without regard to legal entity structures but rather along business lines. While entities may operate without regard to jurisdictional lines, local taxing and accounting regimes are steadfast on ensuring adherence to their respective principles. Chief among these is ensuring that there is a proper allocation of the tax base. The proper allocation of the tax base has long been at the forefront of concerns, so much so that normative transfer pricing principles …
Incremental International Tax Reform: A Review Of Selected Proposals, David L. Cameron, Philip F. Postlewaite
Incremental International Tax Reform: A Review Of Selected Proposals, David L. Cameron, Philip F. Postlewaite
Northwestern Journal of International Law & Business
Business people, tax practitioners, and legal academics generally agree that the United States' international tax regime is broken. Criticisms abound that the system is overly complicated, disadvantageous to American businesses competing in a global economy, and frequently subject to manipulation and abuse. In the recent past, individuals and groups across the political spectrum have proposed numerous reforms to address these problems, some of which seek simply to modify current requirements while others jettison the current system in favor of dramatic alternatives. Two of the more ambitious proposals regarding international tax reform have centered on implementing changes that would significantly modify …
President's Economic Recovery Advisory Board: Suggested Considerations In Fundamental Reform Of The United States Tax Treatment Of Income From Cross Border Trade And Investment, Robert H. Dilworth
President's Economic Recovery Advisory Board: Suggested Considerations In Fundamental Reform Of The United States Tax Treatment Of Income From Cross Border Trade And Investment, Robert H. Dilworth
Northwestern Journal of International Law & Business
The President's Economic Recovery Advisory Board ("PERAB") has as part of its mandated inquiry the reform of the U.S. tax treatment of income from cross border trade and investment. This paper sets forth a short set of recommendations as to tax reform methodology and some substantive proposals. Tax reform should not "start over," or undertake significant changes, without a fairly detailed understanding of what the present regime actually does, or does not do, and identifying the relationship (if any) between the various existing provisions and whatever "the problem" is perceived to be. The present architecture results from the striking of …
International Tax Reform Should Begin At Home: Replace The Corporate Income Tax With A Territorial Expenditure, William B. Barker
International Tax Reform Should Begin At Home: Replace The Corporate Income Tax With A Territorial Expenditure, William B. Barker
Northwestern Journal of International Law & Business
The present U.S. system of international taxation is riddled with problems because it does not satisfy critical principles of economics, justice, or common sense. It fails to accomplish the most important goals that an international system should achieve - that is, protecting the domestic tax base in a way that fosters domestic economic development and the creation of jobs. This paper explores alternatives to the present system to see if they do a better job. Some of the alternatives fail for the same reasons as the present system because they are predicated on the same outmoded theories. Some are clearly …
Credit Vs. Exemption: A Comparative Study Of Double Tax Relief In The United States And Japan, Lawrence Lokken, Yoshimi Kitamura
Credit Vs. Exemption: A Comparative Study Of Double Tax Relief In The United States And Japan, Lawrence Lokken, Yoshimi Kitamura
Northwestern Journal of International Law & Business
The overriding issue in international taxation is the problem of double taxation. Under the tax laws of most countries, income may be taxed on the basis of either residence or source. That is, a country may tax residents of the country on worldwide income and may tax nonresidents on income from sources within the country. Thus, if a resident of one country has income from a business activity or investment in another country, the person may be taxed on the income on a residence basis by its home country and on a source basis in the other country. Most countries …
Inversions Under Section 7874 Of The Internal Revenue Code: Flawed Legislation, Flawed Guidance, Jefferson P. Vanderwolk
Inversions Under Section 7874 Of The Internal Revenue Code: Flawed Legislation, Flawed Guidance, Jefferson P. Vanderwolk
Northwestern Journal of International Law & Business
The Obama Administration's international tax proposals would, if enacted, be likely to increase the U.S. tax costs of many multinational groups that are owned by a U.S. entity. One possible response by the managers or owners of such a group would be to restructure the group via an inversion transaction so that the group would have a foreign corporate parent instead of a US parent entity. Inversions were in vogue in the late 1990s and the early years of this decade until Congress passed the American Jobs Creation Act of 2004, adding section 7874 to the Internal Revenue Code. The …
International Private Equity Valuation And Disclosure, Douglas Cumming, Andrej Gill, Uwe Walz
International Private Equity Valuation And Disclosure, Douglas Cumming, Andrej Gill, Uwe Walz
Northwestern Journal of International Law & Business
Private equity (PE) firms are financial intermediaries standing between the portfolio firms and their investors. They are typically organized as closed-end funds aiming to overcome informational asymmetries and to exploit specialization gains in selecting and overseeing portfolio firms.' However, their existence as financial intermediaries creates new informational asymmetries (with respect to the investors in the PE funds). Fund managers raise follow-on funds before exiting their investments, and may have incentives to overvalue their as-yet-unsold investments when making disclosures to institutional investors. Despite strong incentives to overvalue, PE funds do not face mandatory disclosure rules in any country with a significant …
Coming Together After The Crisis: Global Convergence Of Private Equity And Hedge Funds, Houman B. Shadab
Coming Together After The Crisis: Global Convergence Of Private Equity And Hedge Funds, Houman B. Shadab
Northwestern Journal of International Law & Business
Two of the most significant types of alternative investment funds worldwide are hedge funds and private equity funds. A hedge fund typically engages in short-term trading of financial instruments and compensates its manager on an annual or quarterly basis. A private equity fund typically takes long-term management positions in companies and compensates the fund manager once every several years upon the sale of the fund's assets. Although primarily centered in the United States and Europe, numerous markets worldwide are home to each type of fund. Prior to the subprime mortgage-initiated financial crisis, there was a trend within the alternative investment …
Vultures, Hyenas, And African Debt: Private Equity And Zambia, Olufunmilayo B. Arewa
Vultures, Hyenas, And African Debt: Private Equity And Zambia, Olufunmilayo B. Arewa
Northwestern Journal of International Law & Business
Although the Donegal court explicitly limited its scrutiny to the legal questions raised by the case rather than questions of morality and humanity, 23 the moral and ethical considerations connected with the activities of vulture investors are significant. This is particularly true in Africa, which in the post-colonial period has experienced poor economic performance in both absolute and relative terms, as well as significant and even increasing levels of poverty.24 Poverty has exacerbated political instability in Africa.25 The political situation in much of the African continent is similarly tenuous, with sub-Saharan African states in many instances serving as exemplars of …
Introduction: Symposium On The Globalization Of Private Equity: Changes In The International Market And The Impact On Private Equity Investments , David Van Zandt
Introduction: Symposium On The Globalization Of Private Equity: Changes In The International Market And The Impact On Private Equity Investments , David Van Zandt
Northwestern Journal of International Law & Business
The title of this year's symposium is "Globalization of Private Equity: Changes in the International Market and the Impact on Private Equity Investments." As reflected by the title, the goal of this year's symposium is to explore the changes in the private equity industry after the financial crisis. The papers in this issue examine topics such as the future of convergence between hedge funds and private equity, the legal and ethical implications of vulture funds in developing countries, and the legal, ethical, and financial implications surrounding valuation and disclosure. Additionally, this issue will explore the contentious legal and political debate …
The Taxation Of Compensatory Profits Interests: The Blind Men And The Elephant, Philip F. Postlewaite
The Taxation Of Compensatory Profits Interests: The Blind Men And The Elephant, Philip F. Postlewaite
Northwestern Journal of International Law & Business
The position increasingly held by academics is that the current tax treatment of such receipts is improper and should be obvious to all.6 Apparently, the small but determined group which defends the status quo7 not only fails to appreciate the clarity of the situation,8 but their analysis is derisively dismissed as sophistry and their motives impugned for acting as tools of the establishment. As the lowly representative of the Gang of Three, and the only one apparently not smart enough to be paid for his advocacy,'0 notwithstanding the intensity and inventiveness of the presenters' advocacy, I remain unconvinced. My support …
Not All Carried Interests Are Created Equa, Adam H. Rosenzweig
Not All Carried Interests Are Created Equa, Adam H. Rosenzweig
Northwestern Journal of International Law & Business
Recently, a significant debate over the taxation of so-called "carried interest "in private equity funds has received much attention from scholars, the government, commentators, and the media. This debate has focused on whether private equity fund managers who earn a percentage of the returns generated by the fund should be entitled to preferential "capital gain" treatment on such returns. The primary concern in this debate revolves around whether managers are effectively being compensated for services normally taxed at higher rates while receiving the benefit of preferential rates reserved for capital gains. Proponents of reform point to the services being performed …
Sophistry, Situational Ethics, And The Taxation Of The Carried Interest, Darryll K. Jones
Sophistry, Situational Ethics, And The Taxation Of The Carried Interest, Darryll K. Jones
Northwestern Journal of International Law & Business
This Article is, in essence, a strident expression of indignation about what a majority of tax scholars and, indeed, legislators consider a glaring yet persistent inequity in the tax code. In short, sometimes extraordinarily well-paid fund managers receive compensation taxed at capital gains rates. All other, usually very much lower-compensated, service providers are taxed at ordinary rates. The result is clearly regressive and yet, as of late, even some respected and knowledgeable scholars-though still in the minority-have unabashedly set forth sophisticated-sounding justifications. Objections based on unfairness, real, or even merely perceived, are difficult to express without a tone of indignation, …
The $4 Billion Question: An Analysis Of Congressional Responses To The Fsc/Eti Dispute Under Wto Export Subsidy Standards, William Chou
The $4 Billion Question: An Analysis Of Congressional Responses To The Fsc/Eti Dispute Under Wto Export Subsidy Standards, William Chou
Northwestern Journal of International Law & Business
During the decade-long relationship between the United States and the World Trade Organization (WTO), perhaps no controversy has fomented as long and bitterly as the dispute over the U.S. tax benefits for exporters. This article analyzes two competing bills before the House of Representatives, both devised to bring the United States in compliance with the WTO's ruling against the U.S. Foreign Sale Corporation (FSC) and Exterritorial Income (ETI) tax regimes as prohibited export subsidies. Hit with a $4 billion retaliatory tariff by the European Union, the House sought new tax legislation that would preserve at least some of the tax …
Optimal International Taxation And Tax Competition: Overcoming The Contradictions, William B. Barker
Optimal International Taxation And Tax Competition: Overcoming The Contradictions, William B. Barker
Northwestern Journal of International Law & Business
This paper presents a theory of international taxation based on a new approach to source taxation that reflects world development and synthesizes the objectives of economic efficiency, fairness to taxpayers, and fairness to governments. Adoption of this model results in the preservation of comprehensive income taxation to capital-exporting nations and an expenditure tax base for capital-importing nations. The system would reduce much of the distortion caused by tax competition, eliminating the tax incentive for businesses to use productive assets and technologies outside the country of their development and saving the jobs of many workers.
The Proposed E.U. Vat On Electronically Transmitted Services: Enforcement And Compliance Issues, Thomas Fawkes
The Proposed E.U. Vat On Electronically Transmitted Services: Enforcement And Compliance Issues, Thomas Fawkes
Northwestern Journal of International Law & Business
This paper will begin by discussing the current VAT system in the E.U. It will also describe in detail the provisions of the proposed VAT amendments as they affect electronic commerce transactions with respect to both B2B and B2C transactions. Next, the practical effects of the VAT amendments in terms of increased VAT revenue for the E.U. and its mem-ber states will be discussed. Following will be a discussion on the past and present failures of the E.U. and its Member States in encouraging and en-forcing compliance under the current VAT Directive, and the implication of such failures on the …
China's Tax Preferences To Foreign Investment: Policy, Culture And Modern Concepts, Zhaodong Jiang
China's Tax Preferences To Foreign Investment: Policy, Culture And Modern Concepts, Zhaodong Jiang
Northwestern Journal of International Law & Business
In conclusion, policy-making in China is subject to the leadership's perception of problems and solutions. Taxation must reflect political and economic concerns and closely follow policy choice. For the Chinese, the objective, economic value to foreign businesses should not be as important as the Chinese sincerity and friendly sentiments that the preferential meas- ures symbolize. While the Chinese do refer to modern concepts such as ef- ficiency or equity, they tend to apply their own interpretation and understanding.
The United States' Response To Tax Havens: The Foreign Base Company Services Income Of Controlled Foreign Corporations, Eric T. Laity
The United States' Response To Tax Havens: The Foreign Base Company Services Income Of Controlled Foreign Corporations, Eric T. Laity
Northwestern Journal of International Law & Business
This article is a detailed study of the taxation by the United States of foreign base company services income. Foreign base company services in- come is defined generally as the income derived by a controlled foreign corporation from the performance of services for a related person.2 Con- trolled foreign corporations, in turn, generally are the foreign subsidiaries of U.S. parent corporations.3 A controlled foreign corporation's foreign base company services income is taxed to its U.S. parent corporation, subject to various exclusions and qualifications. This article defines the class of sus- pect relationships between the controlled foreign corporation and its related …
Anti-Deferral Deferred: A Proposal For The Reform Of International Tax Law, John Mcdonald
Anti-Deferral Deferred: A Proposal For The Reform Of International Tax Law, John Mcdonald
Northwestern Journal of International Law & Business
Nowhere is the complexity of the Code more apparent than in the income tax provisions relating to U.S. ownership of foreign corporations.' In fact, the operation of the tax law in this area has become so incredibly complex that many calculations required by the Code can no longer be performed effectively without the use of sophisticated computer software.4 The cost of complying with these Code provisions has started to affect the competitiveness of the corporations to which they apply.5 In fact, there is a definite possibility that our tax laws in this area have become so complex that tax professionals …
Foreign Taxation: The Section 367(E) Regulations -- No Place To Hide, Walter D. Schwidetzky
Foreign Taxation: The Section 367(E) Regulations -- No Place To Hide, Walter D. Schwidetzky
Northwestern Journal of International Law & Business
Foreign taxpayers have long been a thorn in the side of Congress. Not only is the proper incidence of tax a far greater issue than in the domestic context, so is whether that tax will ever be collected. The average foreign taxpayer, with little the IRS can readily attach, is not overly concerned with whether the United States tax bill has been paid. Consequently, the Internal Revenue Code of 1986 (the Code) has a number of provisions designed to overcome the reluctance of foreign taxpayers to pay United States tax.
Treatment Of Border Tax Rebates Of Consumption Taxes Under The Antidumping Law, John D. Mcinerney
Treatment Of Border Tax Rebates Of Consumption Taxes Under The Antidumping Law, John D. Mcinerney
Northwestern Journal of International Law & Business
This Article describes how Zenith Electronics Corp. v. United States ("Zenith") made the treatment of export rebates of consumption taxes an issue under the U.S. antidumping law. It explains the position of the Department of Commerce ("Commerce") that dumping margins should be calculated on a tax net basis (so that they equal the margins that would be found in the absence of taxes), and offers a general criticism of the argument in Zenith.
Taxes, Market Structure, And International Price Discrimination, Richard C. Henderson
Taxes, Market Structure, And International Price Discrimination, Richard C. Henderson
Northwestern Journal of International Law & Business
The Department of Commerce's current cost-based calculation methods cannot measure tax pass-through. In one case, however, Commerce has employed a sophisticated econometric model of supply (cost) and demand elasticities to estimate tax pass-through. Because econometric models can do more than simply measure pass-through, the U.S. Government should adopt an econometric approach in all antidumping cases. Econometric models recognize the dependence of prices on market structure. These models thereby allow the U.S. Government to segregate pricing behavior consistent with different market structures from behavior that injures a balanced set of U.S. interests, which includes producers, consumers, and downstream industries.
Taxation Of Foreign Business And Investment In The People's Republic Of China, Alex Easson, Li Jinyan
Taxation Of Foreign Business And Investment In The People's Republic Of China, Alex Easson, Li Jinyan
Northwestern Journal of International Law & Business
Up until the last six or seven years, very little attention has been paid in the West to the tax system of the People's Republic of China ("PRC" or "China"). This is understandable since, in the immediate post-liberation years, many countries in the Western Hemisphere tried hard to pretend that the PRC did not exist at all. Following its break with the Soviet Union in 1960, China adhered firmly to a policy of self-reliance. China's opening to the West, in economic terms, did not really begin until approximately 1978. Given the type of economic system which had evolved in China …
In Search Of Effective Policies For Foreign Direct Investment: Alternatives To Tax Incentive Policies, Kojo Yelpaala
In Search Of Effective Policies For Foreign Direct Investment: Alternatives To Tax Incentive Policies, Kojo Yelpaala
Northwestern Journal of International Law & Business
It is now largely recognized that the multinational enterprise ("MNE") can play a significant role in the industrialization of a number of different countries. The major way in which the MNE can contribute toward the industrialization of a country is through foreign direct investment ("FDI"). To induce such MNE investment, several host countries have relied significantly on fiscal incentives in general and tax incentives in particular for over half a century. However, after several decades, the effects of these tax incentives on the motivation of MNEs to invest in incentive granting countries continues to be the focus of a heated …
Mca, Inc. V. United States: Judicial Recognition Of The Separate Interests Theory, Daniel N. Zucker
Mca, Inc. V. United States: Judicial Recognition Of The Separate Interests Theory, Daniel N. Zucker
Northwestern Journal of International Law & Business
For United States federal tax purposes, the classificaiton of an entity as a partnership or a corporation has significant ramifications, particularly with respect to entities in foreign countries. Classification is especially important to the owners - whether shareholders or partners - of the entity because the question of whether they are taxed on their share of the profits or only upon repartriation will often depend on how the entity, set up under foreign law, is recognized by the Internal Revenue Service (Service). While entity classification in the domestic area has always been vulnerable to challenge, foreign entities face an additional …
Is The Connection Effective? Through The Maze Of Section 864, Alan B. Stevenson
Is The Connection Effective? Through The Maze Of Section 864, Alan B. Stevenson
Northwestern Journal of International Law & Business
This article discusses certain of the rules under which foreign corporations and nonresident alien individuals may be subjected to United States federal income tax. It may at first be surprising that there are any situations in which the United States would attempt to tax the income of a nonresident alien or a foreign corporation. A moment's reflection, however, will reveal that in some situations it is quite logical that the United States should tax at least a portion of the income of such persons. For example, it seems reasonable that a corporation which conducts some minimum level of business in …
Income Tax Treaty Shopping: An Overview Of Prevention Techniques, Kenneth A. Grady
Income Tax Treaty Shopping: An Overview Of Prevention Techniques, Kenneth A. Grady
Northwestern Journal of International Law & Business
The Internal Revenue Service in recent years has been particularly concerned about third-country residents use of bilateral income tax treaties to avoid paying tax on United States source income. Although third-country residents have benefitted from United States bilateral income tax treaties for more than twenty years, the loss of tax revenue from such unintended use was not considered a major problem. The recent proliferation of tax treaties between the United States and tax havens which resulted in an increased loss of tax revenues, however, has caused the Internal Revenue Service (IRS) to change its evaluation of the treaty shopping problem. …