Systemically Important Financial Institution and Tax arbitrage: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>John Grout
(To make clear extends to non-banks)
 
imported>Doug Williamson
(Add link.)
 
Line 1: Line 1:
(SIFI.)
A form of cross-border tax avoidance, or tax planning, which takes advantage of differences in tax between different jurisdictions.


A financial firm whose disorderly failure would because of its:


(i) Size,
:<span style="color:#4B0082">'''''Tax arbitrage - legislation and principles'''''</span>
(ii) Complexity, and


(iii) Systemic interconnectedness
:"In the context of cross-border finance, the term arbitrage is used to describe the exploitation by multinational groups of asymmetries between different tax regimes (tax regimes do not always match each other equally), to achieve a reduction in the overall level of tax payable by the group.


cause significant disruption to the wider financial system and to economic activity in its (main) country or region of operation.
:For example, tax regimes differ in how they define debt and equity.  


The idea wasw developed for banks considered too big to fail. It has been exended to other types of institutions and the Financial Stability Oversight Council in the US, for example, has provisionally identified certain insurance comapnies and investors as potential US SIFIs.
:This presents opportunities to the adept tax planner who will typically seek a tax deduction for interest payable in a given jurisdiction and arrange for the corresponding receipt to arise in a jurisdiction where it will be taxed as something other than interest (perhaps as a dividend or capital proceeds) or not taxed at all (perhaps because it is seen as an intra-entity payment).  
 
:Examination of the relevant double taxation agreement should show whether any mismatch is legitimate or not."
 
:''HM Revenue & Customs - International Tax Manual.''




== See also ==
== See also ==
* [[Systemic risk]]
* [[Arbitrage]]
* [[Global SIFI]]
* [[Business in Europe: Framework for Income Taxation]]
* [[Too Big To Fail]]
* [[Debt]]
* [[Dividend]]
* [[Double taxation treaties]]
* [[Equity]]
* [[Interest]]
* [[Jurisdiction]]
* [[Legislation]]
* [[Tax]]
* [[Tax avoidance]]
 
 
==External link==
*[https://www.gov.uk/hmrc-internal-manuals/international-manual/intm594510#:~:text=is%20tax%20arbitrage%3F-,What%20is%20tax%20arbitrage%3F,tax%20payable%20by%20the%20group. HMRC - What is tax arbitrage?]
 
[[Category:Accounting,_tax_and_regulation]]

Latest revision as of 08:52, 6 July 2022

A form of cross-border tax avoidance, or tax planning, which takes advantage of differences in tax between different jurisdictions.


Tax arbitrage - legislation and principles
"In the context of cross-border finance, the term arbitrage is used to describe the exploitation by multinational groups of asymmetries between different tax regimes (tax regimes do not always match each other equally), to achieve a reduction in the overall level of tax payable by the group.
For example, tax regimes differ in how they define debt and equity.
This presents opportunities to the adept tax planner who will typically seek a tax deduction for interest payable in a given jurisdiction and arrange for the corresponding receipt to arise in a jurisdiction where it will be taxed as something other than interest (perhaps as a dividend or capital proceeds) or not taxed at all (perhaps because it is seen as an intra-entity payment).
Examination of the relevant double taxation agreement should show whether any mismatch is legitimate or not."
HM Revenue & Customs - International Tax Manual.


See also


External link

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Systemically_Important_Financial_Institution&oldid=46930’