Tax Heavens: Methods and Tactics for Corporate Profit Shifting

Accounting expert Barry Jay Epstein co-authored an article titled, “Tax Heavens: Methods and Tactics for Corporate Profit Shifting,” with lead authors Mark Holtzblatt and Eva K. Jermakowicz, published in the January-February 2015 issue of the International Tax Journal. Excerpts from the article appear below.

Taxes paid to governments are among the most significant costs incurred by businesses and individuals. Tax planning evaluates various tax strategies in order to determine how to conduct business (and personal transactions) in ways that will reduce or eliminate taxes paid to various governments, with the objective, in the case of multinational corporations, of minimizing the aggregate of taxes paid worldwide. Well-managed entities appropriately attempt to minimize the taxes they pay while making sure they are in full compliance with applicable tax laws. This process–the legitimate lessening of income tax expense–is often referred to as tax avoidance, thus distinguishing it from tax evasion, with is illegal.  Click on the link to read the full article.

Article Highlights

• The U.S. corporate tax rate and the appeal of tax havens.

• Countries listed on various tax haven lists.

• Methods of corporate profit shifting.

  • Contribution of equity, allocation of debt, and earnings stripping.

  • Tax inversion.

  • Transfer pricing.

  • Avoiding Subpart F income – check-the-box and hybrids.

  • Foreign tax credit.

• Problems attributable to the U.S. tax code.

• IRS and Treasury’s new anti-tax inversion actions.

• Corporate tax reform recommendations.

Click on the link to read the full article.