10: International and Indirect Taxation Flashcards

(10 cards)

1
Q

residence (OECD)

A

place of incorporation (domiciled country)

place of effective management

place of permanent establishment

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2
Q

if you are an international individual/entity, how to establish residence?

A

only resident in one country

use country of effective management

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3
Q

withholding tax (WHT)

A

tax on a dividend payment, deducted at source and paid to the local government

before the dividend payment can be made overseas and leaves the country

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4
Q

underlying tax (ULT)

A

when a company pays dividends, it comes out of post-tax profits

so there is already a tax on the dividend, which is the underlying tax
- tax already suffered on the dividend

proportion of the foreign tax paid on the profits relating to dividends received

calculated as gross dividend x tax rate paid by foreign company / foreign company’s profit after tax

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5
Q

double taxation

A

when dividends are received from overseas, dividend income is likely to have been subject to WHT and ULT

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6
Q

3 methods to give relief for double taxation

A

exemption
- income from one country is not taxable in another

tax credit
- tax paid in one country deducted from tax due in another country

deduction
- only looking at income after tax so net amount is taxable in the second country

OECD suggests exemption and tax credit

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7
Q

transfer pricing

A

companies in a group format can structure transactions to move profits/losses around and between groups

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8
Q

transfer pricing rules

A

profit has to be computed as if the transaction had been carried out arms length rather than prices actually used

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9
Q

types of indirect taxation

A

unit tax (excise duties)

ad valorem tax (sales, VAT)

excise duties

property taxes

wealth tax

consumption tax

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10
Q

3 categories for suppliers of goods/services with regards to sales tax

A

standard-rated goods
- sales tax charged at standard rate

zero-rated goods
- sales tax charged at 0%
- rated so you can reclaim tax suffered on purchases

exempt
- no sales tax charged but also none reclaimed

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