Transcript
Seminar 8:MNCs and tax
Reducing tax bills
• Multinational corporations (MNCs) use several methods to reduce their tax bills
• Many of these methods are perfectly legal:• a) they take advantage of loopholes in
existing tax laws• b) they take advantage of lower rates of
taxation in some countries
Registration scams
• Corporations often register their legal addresses in low-tax jurisdictions to reduce their tax liabilities
• Such registrations often involve the creation of fictitious entities, with the companies conducting no actual transactions in the place of registration
BMW
Samsung
Gazprom
Coca Cola
Ugland House?
Ugland House
• Ugland House, in the British Cayman Islands, is the registered legal address of more than 18,000 companies
• The Cayman Islands are a notorious tax haven, where multinational companies divert profits to minimise their tax liabilities
1209 North Orange Street,Wilmington, Delaware?
Delaware
• 1209 North Orange Street, in Wilmington, Delaware is the legally registered office of more than 200,000 corporations, including Ford, Coca Cola, General Motors and Kentucky Fried Chicken
• These companies all benefit from Delaware’s business-friendly tax laws, allowing them to reduce their corporate tax bills
Other tax havens
• British Virgin Islands• Belize• Luxembourg• Monaco• Switzerland• Hong Kong• Mauritius• Liechtenstein
Transfer pricing
A simple guide from the Guardian
http://www.guardian.co.uk/flash/page/0,,
2201916,00.html
Fake loans
• MNC subsidiaries in high-tax jurisdictions often take out loans from other subsidiaries
• The interest on these loans can be offset against profits
• The loans can often be suspiciously large, allowing subsidiaries to reduce declared profits and thus minimise their tax liabilities
top related