7 Feb 2006

The Demand for Tax Haven Operations

The Demand for Tax Haven OperThe Demand for Tax Haven Operations

Mihir A. Desai
Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

C. Fritz Foley
Harvard Business School; National Bureau of Economic Research (NBER)

James R. Hines Jr.
University of Michigan at Ann Arbor Law School; National Bureau of Economic Research (NBER)


March 2005

Abstract:
What types of firms establish tax haven operations, and what purposes do these operations serve? Analysis of affiliate-level data for American firms indicates that larger, more international firms, and those with extensive intrafirm trade and high R&D intensities, are the most likely to use tax havens. Tax haven operations facilitate tax avoidance both by permitting firms to allocate taxable income away from high-tax jurisdictions and by reducing the burden of home country taxation of foreign income. The evidence suggests that the primary use of affiliates in larger tax haven countries is to reallocate taxable income, whereas the primary use of affiliates in smaller tax haven countries is to facilitate deferral of U.S. taxation of foreign income. Firms with sizeable foreign operations benefit the most from using tax havens, an effect that can be evaluated by using foreign economic growth rates as instruments for firm-level growth of foreign investment outside of tax havens. One percent greater sales and investment growth in nearby non-haven countries is associated with an 1.5 to two percent greater likelihood of establishing a tax haven operation.
Keywords: Tax havens, tax competition, foreign direct investment, transfer pricing, investment, multinational firms
JEL Classifications: H87, F23, F21
Working Paper Series
Date posted: September 21, 2004 ; Last revised: February 03, 2006
Suggested Citation
Desai, Mihir A., Foley, C. Fritz and Hines Jr., James R.,The Demand for Tax Haven Operations(March 2005). Available at SSRN: http://ssrn.com/abstract=593546 or DOI: 10.2139/ssrn.593546
ations
Mihir A. Desai (Harvard Business School and National Bureau of Economic Research), C. Fritz Foley (Harvard Business School and National Bureau of Economic Research) and James R. Hines Jr. (University of Michigan and National Bureau of Economic Research) published this report at March 2005.


Here is the Abstract:

What types of firms establish tax haven operations, and what purposes do these operations serve? Analysis of affiliate-level data for American firms indicates that larger, more international firms, and those with extensive intrafirm trade and high R&D intensities, are the most likely to use tax havens. Tax haven operations facilitate tax avoidance both by permitting firms to allocate taxable income away from high-tax jurisdictions and by reducing the burden of home country taxation of foreign income.

The evidence suggests that the primary use of affiliates in larger tax haven countries is to reallocate taxable income, whereas the primary use of affiliates in smaller tax haven countries is to facilitate deferral of U.S. taxation of foreign income. Firms with sizeable foreign operations benefit the most from using tax havens, an effect that can be evaluated by using foreign economic growth rates as instruments for firm-level growth of foreign investment outside of tax havens. One percent greater sales and investment growth in nearby non-haven countries is associated with an 1.5 to two percent greater likelihood of establishing a tax haven operation.

Available at SSRN: http://ssrn.com/abstract=593546 or DOI: 10.2139/ssrn.593546



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4 Feb 2006

Deslocalización Fiscal a favor del los países del Este

El término “deslocalización” nació haciendo referencia al cambio de domicilio fiscal de empresas por motivos fiscales. Sólo posteriormente esta palabra se ha empleado para explicar los cambios de las empresas industriales y de servicios en pos de territorios con una mano de obra más barata.

El impuesto sobre sociedades es uno de los factores que influye en las decisiones de las empresas dónde localizar sus instalaciones de producción (dónde producir).

Actualmente, los bajos tributos junto con la mano de obra barata en los países recién incorporación a la Unión Europea pueden tener un impacto drástico sobre el empleo, la inversión y la producción industrial en los Estados miembros de Unión Europea. Por ello, Instituciones y políticos se preguntan si puede Europa Occidental reducir rápida y sustancialmente sus impuestos.

Mientras los países de Europa Occidental son acostumbrados a altos impuestos sobre la renta, los países de Europa Oriental aplican tasas impositivas radicalmente bajas. Chipre y Hungría (ésta incluso tiene un tipo de sociedad denominada “offshore”) tienen impuestos sobre sociedades muy beneficiosos para las empresas que operan en el exterior. Letonia es muy agresiva también en este campo. Pero también es verdad que, entre los miembros de la “vieja” Unión Europea Finlandia, Irlanda y Luxemburgo, están también en la zona de ventajas fiscales.

Para permanecer competitivos en la Unión Europea ampliada, los países de Europa Occidental deben responder rebajando drásticamente sus niveles de tributación. Austria tomó la iniciativa recortando los impuestos sobre sociedades del 34 al 24 por ciento para responder a la competición de la República Eslovaca y Hungría. Alemania y Francia también siguen el ejemplo de Austria. El impuesto sobre sociedades en Irlanda ya está reducido hasta el 10 por ciento.

En los países del Este, los impuestos se convierten en un instrumento para los nuevos miembros de la Unión para mejorar su competitividad. En diciembre de 2003, la República Eslovaca puso en práctica una sola tasa impositiva del 19 por ciento para ingresos individuales y corporativos. A partir del 1 de mayo de 2004, Hungría y Polonia también han reducido sus impuestos sobre sociedades al 16 por ciento y el 19 por ciento respectivamente.

Sin embargo, tal competición agresiva basada en los impuestos es insostenible a largo plazo, teniendo en cuenta las condiciones económicas y sociales características para la región. A Europa Occidental le ocurre lo mismo. Sus gobiernos dependen considerablemente de los impuestos para financiar su sistema de salud y bienestar. Además, el gran déficit fiscal de Francia, Alemania e Italia en particular, es ya es un tema preocupante para la Unión Europea.

Alguien podría pensar que se podría aplicar el símil de una guerra de precios entre empresas en un mercado más o menos perfecto. Basta con que algunas de las empresas bajen fuertemente sus precios para que la competencia tenga que reaccionar más allá de lo razonable. Sin embargo, las barreras existentes por la normativa interna de cada país, a pesar de los esfuerzos de la Comisión Europea, distan mucho de crear una situación de “mercado perfecto” en que cada empresa podría elegir a dónde trasladarse.

Recientemente, no obstante, una reciente Decisión del TJCE podría favorecer la deslocalización de empresas dentro de la Unión Europea. Esta disposición está dirigida en general a cualquier situación en la que un contribuyente que posee acciones en una compañía sujeta al Impuesto sobre Sociedades, traslade su residencia al extranjero, por el motivo que sea, y por ende, presume una intención de burlar la legislación tributaria francesa, en todos los contribuyentes que transfieran su residencia fuera de Francia.

El TJCE comenzó por subrayar que la libertad de establecimiento es uno de los principios fundamentales del Derecho Comunitario, y recordó que, de acuerdo con una constante jurisprudencia, la observancia de esta libertad, impide a un Estado Miembro dificultar el establecimiento de sus nacionales en otro Estado Miembro, incluso a través de la legislación tributaria.

Salvador Trinxet Llorca ha sugerido que este veredicto elimina los desincentivos fiscales para que los individuos y las empresas se trasladen de un Estado Miembro a otro, y seguramente incentivará la movilidad de las entidades en busca de las condiciones tributarias más atractivas que existan dentro de la UE.

Salvador se muestra optimista de que la nueva Empresa Europea, o Societas Europaea, cuya existencia como figura legal está prevista para octubre de este año, también fomentará la movilidad de las empresas. Sin embargo, otros expertos en fiscalidad internacional consideran poco probable que la misma tenga muchas implicancias positivas o negativas, ya que la mayoría de sus disposiciones se encuentran ya contenidas dentro de las legislaciones nacionales o de la UE.

Hace ya algún tiempo, una decisión del Tribunal de Justicia de la Unión Europea (TJCE), el caso Lasteyrie, puede crear un importante precedente en el ámbito de la fiscalidad internacional. En opinión de Salvador Trinxet Llorca, profesor de Fiscalidad Internacional del IESE y Miembro de la Comisión de Asuntos Fiscales de la Cámara de Comercio de Barcelona, esta decisión del TJCE seguramente comportará que, en el futuro, las empresas europeas podrán trasladarse en busca de las condiciones tributarias más atractivas.

(articulo escrito a petición de Cinco Dias, pero que por razones internas finalmente no se publicó).

2 Feb 2006

International Organisations, Blacklisting and Tax Haven Regulatory Reform

Sharman, Jason. "International Organisations, Blacklisting and Tax Haven Regulatory Reform" Paper presented at the annual meeting of the International Studies Association, Le Centre Sheraton Hotel, Montreal, Quebec, Canada, Mar 17, 2004
Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: This paper seeks to evaluate the relative success of exclusionary or coercive strategies versus inclusionary or consensual strategies employed by international organisations in securing tax haven states' compliance with new global financial regulations. In 1998 the G7 launched several related regulatory initiatives designed to tame tax competition, counter money laundering and shore up international financial stability.

These initiatives were premised on a 'top-down' or exclusionary approach, whereby standards were set in closed fora and diffused to small tax haven states by blacklisting and sanctions. This approach was intended to yield quick results and avoid 'lowest common denominator' standards. Almost six years later, this paper argues that international organisations such as the OECD significantly over-estimated their ability to secure the unwilling compliance of even the smallest tax haven states. As a result, more traditional inclusionary strategies based on sovereign equality and consensus now seem just as likely to be effective in setting global standards. Evidence is predominantly taken from the OECD's 'harmful tax competition' initiative, but also includes that body's campaign against the illicit use of corporate vehicles, the Financial Action Task Force, the Financial Stability Forum, the IMF Offshore Audit and the International Taxation Dialogue.

This Blog/Web Site ("Blog") does not to provide specific legal advice, it is for educational purposes only. This Blog is made available by the international adviser, lawyer or law firm for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice.

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