C6 - Taxation Of Offshore Entities

Question 1

Trusts

Answer 1

Not separate legal entity
Taxed in jurisdictions where majority of trustees reside
NB beneficiaries and settlor also exposed to tax under differing circumstances

Question 2

Tax of companies

Answer 2

U.K. Residence companies - corporate tax on all chargeable profits on worldwide basis

Non-UK resident - corporate tax if they trade in U.K. Through permanent establishment. May also be liable for income tax on non-trading income

Question 3

Taxation of partnerships

Answer 3

Partners of GP required to pay income on their share of profit

Question 4

Taxation on foundations

Answer 4

Residence of foundations will be deemed as if they were a company

Question 5

Tax avoidance

Answer 5

Legal
Not morally right
Tactical planning
Legal means to delay and minimise tax

Question 6

Tax evasion

Answer 6

Illegal
Lie on tax form
Not declare income

Question 7

Organisation of economic co-operation and development

Harmful tax competition

Answer 7

1998 report
Identified tax havens
In deciding if it was a tax haven, lack of derive exchange of info was key intention
40 jurisdictions

Question 8

Organisation of economic co-operation and development

Exchange of info

Answer 8

OECS views are transparent and effective info exchange as essential in enabling countries to apply and enforce tax laws

Question 9

Organisation of economic co-operation and development

Model tax convention

Answer 9

Obligation to exchange info relevant to correct application of tax convention and purpose of admin and enforcement of domestic tax laws

Question 10

Organisation of economic co-operation and development

Model agreement on exchange of info on tax matters

Answer 10

Constituted of representations from OECD members countries and delegates from other offshore centres

Agreement represents standard of effective exchange of info for purpose of OECD on harmful tax practices