Tightening offshore tax rules

[FreakinDJ]

Tightening offshore tax rules

Attention lawmakers looking for ways to bring down the country's budget deficit.

Sen. Carl Levin, D-Mich., says he knows an easy way to get $100 billion into the U.S. Treasury each year: close offshore tax loopholes and strengthen offshore tax enforcement.

Levin has introduced a bill that contains a variety of measure to end what he calls "offshore trickery" and what the Internal Revenue Service defines as abusive tax havens. This session of Congress is the fifth one in which the Michigan senator sponsored such legislation.

Entitled the Stop Tax Haven Abuse Act, this latest Levin bill is a product of the investigative work of the Permanent Subcommittee on Investigations, which Levin chairs. Over the years, the subcommittee has examined offshore tax abuses, including the use of offshore corporations and trusts to hide assets, the use of tax haven banks to set up secret accounts and the involvement of U.S. bankers, lawyers, accountants and other professionals to devise and conduct abusive tax shelters.

http://www.bankrate.com/financing/taxes/tightening-offshore-tax-rules/#ixzz1TylBdZIU

Why does proposed legislation closing Corporate Tax loopholes never make the news ???

http://levin.senate.gov/newsroom/press/release/summary-of-the-stop-tax-haven-abuse-act-of-2011/?section=alltypes

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1. Kind of hypocritical of the United States to complain when we are OURSELVES a huge offshore banking

location. One of the most important ones globally, if I recall correctly.

[FreakinDJ]

3. Not so true any more - US Corps hold $2 Trillion off shore

in Tax Deferred accounts

[lumpy]

4. I have a hard time interpreting your post. Respectfuly,

could you explain?

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6. The US banking industry provides offshore banking services to foreign entities

similar to that which is provided by, for example, Switzerland to US entities, at a cost to extra-US jurisdictions in the amounts of $billions.

[FreakinDJ]

8. I wish you would provide links for these claims

I think this goes way beyond just banking

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10. I have links up the wazoo, and I am not being facetious.

However, I will have to provide them later. Cheers. :)

[FreakinDJ]

12. "What would a Troll say" for $100 Pat

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14. He would say, follow the link:

http://taxjustice.blogspot.com/

;)

[lumpy]

9. Yes please links

v

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11. See my post #10. Cheers.

:)

[FreakinDJ]

7. Gaping Holes in US Corp Tax Code

that have long been manipulated

The US doesn't require any form of "Means Testing" Arms Length Corporate transactions. Meaning Chevron Global (a foreign subsidiary corp) can sell Crude Oil to the US Parent Corporation at inflated prices. Chevron Global is not Taxed because they are a "Foreign Corporation", Chevron Inc has the increased deduction of the inflated Crude Oil cost vs: profits margin.

BTW: 60% of ALL Global Trade are these "Inter-Corporation" Transactions

Transfer Pricing

Transfer pricing is one of the most important issues in international tax.

Transfer pricing happens whenever two related companies – that is, a parent company and a subsidiary, or two subsidiaries controlled by a common parent – trade with each other. This happens when, for instance, a US-based subidiary of Coca-Cola buys something from a French-based subsidiary of Coca-Cola. When the parties establish a price for the transaction, they are engaging in transfer pricing.

Transfer pricing is not, in itself, illegal or abusive. What is illegal or abusive is transfer mispricing, also known as transfer pricing manipulation or abusive transfer pricing. (Transfer mispricing is a form of a more general phenomenon known as trade mispricing, which includes trade between unrelated or apparently unrelated parties - an example is reinvoicing.)

It is estimated that about 60 percent of international trade happens within, rather than between, multinationals: that is, across national boundaries but within the same corporate group. Suggestions have been made that this figure may be closer to 70 percent.

http://www.taxjustice.net/cms/front_content.php?idcat=139

[AmericaIsGreat]

2. Bill will die before going anywhere, public won't know about it

Public will go on believing nobody is trying to solve these issues and Levin's constituents might even get mad and not re-elect him.

And this ignorance is what is going to kill us.

[FreakinDJ]

5. DING DING DING - We have a Winner Folks

This is a summary of the Stop Tax Haven Abuse Act, 1346. Read a press release about the bill here. Access the bill as introduced here. Read Levin's floor statement on the introduction of the bill here.
Targeting $100 billion in lost revenue each year from offshore tax dodges, the bill would:

AUTHORIZE SPECIAL MEASURES TO STOP OFFSHORE TAX ABUSE (§101) by allowing Treasury to take specified steps against foreign jurisdictions or financial institutions that impede U.S. tax enforcement.

STRENGTHEN FATCA (§102) by clarifying under the Foreign Account Tax Compliance Act when foreign financial institutions and U.S. persons must report foreign financial accounts to the IRS.

ESTABLISH REBUTTABLE PRESUMPTIONS TO COMBAT OFFSHORE SECRECY (§102) in U.S. tax and securities law enforcement proceedings by treating non-publicly traded offshore entities as controlled by the U.S. taxpayer who formed them, sent them assets, received assets from them, or benefited from them when those entities have accounts or assets in non-FATCA institutions, unless the taxpayer proves otherwise.

STOP COMPANIES RUN FROM THE UNITED STATES CLAIMING FOREIGN STATUS (§103) by treating foreign corporations that are publicly traded or have gross assets of $50 million or more and whose management and control occur primarily in the United States as U.S. domestic corporations for income tax purposes.

STRENGTHEN DETECTION OF OFFSHORE ACTIVITIES (§104) by requiring U.S. financial institutions that open accounts for foreign entities controlled by U.S. clients or open foreign accounts in non-FATCA institutions for U.S. clients to report the accounts to the IRS.

CLOSE CREDIT DEFAULT SWAP (CDS) LOOPHOLE (§105) by treating CDS payments sent offshore from the United States as taxable U.S. source income.

CLOSE FOREIGN SUBSIDIARY DEPOSITS LOOPHOLE (§106) by treating deposits made by a controlled foreign corporation (CFC) to a financial account located in the United States, including a correspondent account of a foreign bank, as a taxable constructive distribution by the CFC to its U.S. parent.

REQUIRE ANNUAL COUNTRY-BY-COUNTRY REPORTING (§201) by SEC-registered corporations on employees, sales, financing, tax obligations, and tax payments.

ESTABLISH A PENALTY FOR CORPORATE INSIDERS WHO HIDE OFFSHORE HOLDINGS (§202) by authorizing a fine of up to $1 million per violation of securities laws.

REQUIRE ANTI-MONEY LAUNDERING PROGRAMS (§§203-204) for hedge funds, private equity funds, and formation agents to ensure they screen clients and offshore funds.

STRENGTHEN JOHN DOE SUMMONS (§205) by allowing the IRS to issue summons to a class of persons that relate to a long-term project approved and overseen by a court.

COMBAT HIDDEN FOREIGN FINANCIAL ACCOUNTS (§206) by allowing IRS use of tax return information to evaluate foreign financial account reports, simplifying penalty calculations for unreported foreign accounts, and facilitating use of suspicious activity reports in civil tax enforcement.

STRENGTHEN PENALTIES (§§301-302) on tax shelter promoters and those who aid and abet tax evasion by increasing the maximum fine to 150% of any ill-gotten gains.

PROHIBIT FEE ARRANGEMENTS (§303) in which a tax advisor is paid a fee based upon the amount of paper losses generated to shelter income or taxes not paid by a client.

REQUIRE BANK EXAMINATION TECHNIQUES (§304) to detect and prevent abusive tax shelter activities or the aiding and abetting of tax evasion by financial institutions.

ALLOW SHARING OF TAX INFORMATION (§305) upon request by a federal financial regulator engaged in a law enforcement effort.

REQUIRE DISCLOSURE OF INFORMATION TO CONGRESS (§306) related to an IRS determination of whether to exempt an organization from taxation.

DIRECT THE ESTABLISHMENT OF STANDARDS FOR TAX OPINIONS (§307) rendering advice on transactions with a potential for tax avoidance or evasion.

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13. Here is a link from the Tax Justice Network's 'Financial Secrecy Index'

which is essentially a ranking of sovereign jurisdictions globally and how much bank secrecy jurisdictions possess relative to each other:

>>Shining light into dark places

Secrecy is a central feature of the global financial system. Jurisdictions compete with each other to provide it, in order to attract financial flows – with appalling effects elsewhere. It is essential to identify the worst culprits in providing this secrecy. But nobody has ever tried to do this in a systematic, objective way – until now.

The Financial Secrecy Index (FSI) creates a ranking which identifies the jurisdictions that are most aggressive in providing secrecy in international finance, and which most actively shun co-operation with other jurisdictions. It attaches a weighting to each jurisdiction, according to the scale of cross-border financial services activity that it hosts.

The two measures – the opacity score, and the weighting, are combined to create the Financial Secrecy Index. Nothing like this has been done before...<<

http://www.financialsecrecyindex.com/

And the State of Delaware places very high on the index:

>>This weak opacity score arises because the USA (Delaware):

1. Provides banking secrecy;
2. Does not put details of trusts on public record;
3. Does not comply sufficiently with international regulatory requirements
4. Does not require that company accounts be available on public record;
5. Does not require that beneficial ownership of companies is recorded on public record;
6. Does not maintain company ownership details in official records;
7. Did not respond to Tax Justice Network requests for information;
8. Does not participate in the European Union Savings Tax Directive;
9. Has many tax information agreements;
10. Does not have adequate access to banking information;
11. Allows company redomiciliation;
12. Allows protected cell companies.
<<

http://www.secrecyjurisdictions.com/PDF/USA_Delaware.pdf

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15. From Ceasefire Magazine:

>>MY: Why has the OECD proved so ineffective at regulating tax havens?

NS: It’s pretty simple really. The world’s biggest tax havens, or secrecy jurisdictions as they are sometimes known, are big OECD countries or their dependencies. There are different ways to measure where the world’s biggest tax havens are, but on secrecy the best objective measure is the Tax Justice Network’s Financial Secrecy Index. It shows that the biggest secrecy jurisdictions (tax havens) are the United States, Luxembourg, Switzerland, the Cayman Islands, the United Kingdom and Ireland.

Any systems that attempted to crack down seriously on secrecy or other tax haven characteristics at a global level are opposed, and usually cut down, by financial sector interests in those countries. So the game has been to give the appearance of a crackdown, while doing very little in practice...<<

http://ceasefiremagazine.co.uk/features/ideas/interview-shaxson/

Which reinforces response #2, America Is Great's post, above.

[FreakinDJ]

16. well thanks for the link then

all be it not all that timely but provided none the less

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17. On a related piece of legislation introduced also by Sen. Levin more recently:

>>WASHINGTON, August 2, 2011 – Senator Carl Levin and Senator Charles Grassley introduced the Incorporation Transparency and Law Enforcement Assistance Act, which would require corporations to provide information about who owns or controls the corporation and benefits from its existence.

This bill is supported by the Financial Accountability and Corporate Transparency (FACT) coalition, which includes a broad range of organizations with an interest in seeing the loopholes closed due to their impact on jobs, critical programs, small businesses, human rights, corruption and national security.

“The United States cannot expect cooperation from other countries when it comes to corporate accountability, transparency and tax reporting while looking the other way here at home,” said Nicole Tichon, Executive Director of Tax Justice Network USA and a founding member of the FACT coalition...<<

http://taxjustice.blogspot.com/2011/08/us-bill-introduced-to-shed-light-on.html

I have no opinion about the legislation itself; simply providing corroborating commentary with regard to the US being ALSO an 'offshore' tax haven.

[FreakinDJ]

18. You are 100% correct in the sense ....

US Corporate Tax Code provides the tax loopholes that make all these Tax Havens work effectively. Countries around the world pose an economic risk to themselves should they act alone to combat the abuse. The US merely refuses

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19. There's a lot of really fascinating investigative stuff out there

for those (like you and me, lol) who are into these kinds of current events. (You'll notice this thread is basically just between you and me. :rofl: )

:hi:

[FreakinDJ]

20. So Sad it flys right over the head of 99% of the folks here

basically we are stating the reasons the country is broke, losing it's position as a world leader, and slipping into 3rd world society