For Colombia, as well as for other countries in the world that are not capital exporters, one important question is whether CFC rules are necessary or are indirectly a requirement to be part of world organizations like the OECD (which Colombia is not a member) in order to be on the radar of larger economies.
5 min read
Germany has had a Controlled Foreign Corporation (CFC) regime since 1972, when the German Foreign Transactions Tax Act was enacted. Under the German regime, a CFC is a foreign company where its capital or voting rights are either directly or indirectly majority-owned by German residents at the end of its fiscal year.
6 min read
Taxing GILTI puts states at a competitive disadvantage compared to their peers—all for a tax that makes very little sense at the state level, and which legislators never sought in the first place.
5 min read
Though they are limited by both data and assumptions, the OECD will face similar limitations. As policymakers work to fine-tune the proposals under both Pillar 1 and 2 the impact assessment should be a critical part of that discussion.
6 min read
The CFC legislation in Spain is not as complicated as it is in some other countries, and it is aligned with the standards recommended by the OECD. The Spanish rules have evolved in a way that the rules are designed to comply with the EU principles not to interrupt the functioning of the Union and its single market.
4 min read
The OECD has been working to assess the impact of their program of work, and it will be critical for this assessment to take into account impacts not only on revenues, but also on growth and investment.
7 min read
In France, Controlled Foreign Corporation (CFC) rules were first enacted in 1980. The French tax regime operates on a strict territorial basis, where only profits generated in the country are subject to tax in France.
5 min read
The Chinese approach to base erosion and profit shifting is more focused on the application of transfer pricing rules and not on the application of CFC rules. Even with the rules in place, the Chinese tax authorities have not enforced the rules as much as other countries have.
3 min read
Addressing tax avoidance is a key political issue for many countries, but these policies should not be discussed without accounting for the size of the current problem, how recent policy changes have addressed it, and what potential impacts might come from this new approach.
4 min read
If there is double taxation due to digital services taxes or because a country is unwilling to conform to the structure of the Secretariat’s proposal, the impact would be a net negative for many businesses.
8 min read
The continuation of this work is important, but the OECD and policymakers around the world should carefully consider whether these proposals will lead to more certainty, or if they will undermine that goal by simply be a step toward more unilateralism. The impact on cross-border investment will also be a critical issue to consider, and the ongoing impact assessment by the OECD is an important part of the work.
6 min read
Countries around the world often design their tax policies to become attractive targets for foreign investment. These policies can be anything from a system with special preferences for certain industries to a well-designed tax system based on principles of sound tax policy. Systems that are rife with special preferences and complexities can create distortions in local jurisdictions and across the global economy.
3 min read
France’s new 3 percent digital tax may be targeted at Amazon and other large digital firms, but Amazon’s French vendors will bear the burden of the tax.
3 min read
The UK rules are designed to arrive at the most accurate definition of foreign income that should be taxed in the home country. These rules apply one of the most detailed approaches to solving the issue of taxing the right type and amount of foreign income. The method can be considered more effective, but the compliance implications and derived costs may be higher compared to those that are derived from the application of other methods.
7 min read
As with other anti-base erosion policies, transfer pricing regulations reveal the challenges of designing rules that address problems associated with various strategies businesses use to minimize their tax burdens. While countries may want to target specific abuses, the way the rules are designed can have real economic impacts on cross-border investment.
6 min read