Exchange-of-Information Clauses in International Tax Treaties

Philippe Bacchetta (University of Lausanne; Swiss National Bank - Study Center Gerzensee; Centre for Economic Policy Research (CEPR); Swiss Finance Institute) and Maria Paz Espinosa (Universidad del Pais Vasco - Department de Fundamentos del Analisis Economico) published this 2001 paper in International Tax and Public Finance, Vol. 7, No. 3, 2000

Here is the Abstract:

This paper examines bilateral double taxation treaties, with an emphasis on information exchange among tax authorities. A major objective is to understand which countries are more likely to sign a tax-relief treaty and when information-exchange clauses will be added to a treaty. A simple model with two asymmetric countries and repeated interactions among governments is used. The paper shows that no information exchange clause may be added to a tax treaty when there is a reciprocity requirement, when there is a high cost of negotiation, when there is a cost of providing information, or with one-way capital flows. It is also shown that an information clause increases the gains from a tax relief treaty, but may make it less sustainable.

Available at SSRN: http://ssrn.com/abstract=261971

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Global picture of paying taxes worldwide

Complex tax systems cut tax revenues for government and make it very hard to assess the true tax burden on firms, according to a November 2006 report by the World Bank Group and PricewaterhouseCoopers. The report presents quantitative indicators on the tax rates, payment frequency, and time to comply with taxes compared across 175 economies - from Afghanistan to Zimbabwe. Top reformers are identified and best practices in how to reform tax regulations are highlighted. This report gives policymakers the ability to measure tax regulation performance in comparison to other countries, learn from global best practices, and prioritize reforms.

The report suggests that governments and industry can achieve a win-win situation by working together to help simplify tax systems and improve revenue collection. This is especially true in developing countries where much of the economy operates informally and tax evasion is a major problem. There is real scope for countries to learn from each other’s practices.


Points of interest:

Tax rates are lowest in the Middle East and North Africa and highest in Sub-Saharan Africa, where a company on average pays over 60 percent of its profits as tax.

Complying with administrative tax requirements is a real burden for companies in most countries. On average in the 175 economies studied, businesses submit 35 pages of tax returns a year in order to comply with regulations. But there is significant variation between countries - in Cameroon, the average annual tax return for businesses is 172 pages, while in Austria it is 17.

Worldwide, it takes on average 332 hours per year for businesses to comply with all tax requirements. But this time ranges from 2,600 hours in Brazil to just 68 in Switzerland.

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.

The Blog does not constitute legal advice and is not a substitute for competent legal advice from a licensed attorney in your state. Any comment posted on the Blog can be read by any Blog visitor; do not post confidential or sensitive information. Any links from another site to the Blog are beyond the control of us.

By using this blog site you understand that there is no attorney client relationship between you and the Blog.

The Blog should not be used as a substitute for competent legal advice from a licensed professional adviser or lawyer in your country.

Our firm and do not convey their approval, support or any relationship to any site or organization. The use of this Blog does not implicitly or explicitly convey any warranties or representations as to the accuracy of the information contained herein.

This Blog has created this privacy statement in order to demonstrate our firm commitment to privacy. The following discloses the information gathering and dissemination practices for this Blog.

This Blog takes your privacy very seriously. Our customers told us they want to see clear, easy-to-read information about our privacy commitments and policies. We have made our privacy policies easier to find and easier to read. And we're listening. We welcome your questions and feedback on our privacy policies, and invite you to contact us with your thoughts.

Customer Privacy Controls and Choices:
• You can review and correct your Personal Information collected by us.
• You can limit certain types of solicitation communications from AT&T, including marketing contacts made via telephone, e-mail and text messaging.
• We will provide you with notice of changes to this policy.

Our privacy commitments are fundamental to the way we do business every day. These apply to everyone who has a relationship with this Blog and visitors.
• We will protect your privacy and keep your personal information safe. We use powerful encryption and other security safeguards to protect customer data, when available.
• We will not sell your personal information to anyone, for any purpose. Period.
• We will fully disclose our privacy policies in plain language, and make our policies easily accessible to you.
• We will notify you of any revisions to our privacy policy, in advance. No surprises.
• You have choices about how this Blog uses your information for marketing purposes. Customers are in control.


This Privacy Policy identifies and describes the way This Blog uses and protects the information we collect about visitors. All use of this Blog is subject to this Privacy Policy.

Use of Location Information
• When your wireless device is on, it sends periodic signals to the nearest cell site. We use that information to provide your wireless services;
• You can use your wireless device to obtain a wide array of services based on the approximate location of the device, referred to as Location Based Services, or LBS. The information you receive in connection with your use of LBS may include advertisements related to your request and your location;

Online Activity Tracking and Advertising
• We collect information about your activity on this Blog for a number of purposes using technologies such as cookies, Web beacons, widgets and server log files.
• We and our advertising partners use that information, as well as other information they have or we may have, to help tailor the ads you see on our sites and to help make decisions about ads you see on other sites.

The Information We Collect, How We Collect It, And How We Use It

We collect different types of personal and other information based on your use of our products and services and our business relationship with you. Some examples include:
• Contact Information that allows us to communicate with you -- including your name, address, telephone number, and e-mail address;
• Equipment, Performance, Site Usage, Viewing and other Technical Information about your use of our network, services, products or Web sites.

We collect information in 2 primary ways:
• You give it to us when you register to provide comments;
• We collect it automatically when you visit our Blog.

We use the information we collect in a variety of ways, including to:
• Provide you with the best visitor experience possible;
• Deliver customized content that may be of interest to you;
• Address network integrity and security issues;
• Investigate, prevent or take action regarding illegal activities, violations of our Terms of Service or Acceptable Use Policies; and
• For local directory and directory assistance purposes.

Aggregate or Anonymous Information:

We may share aggregate or anonymous information in various formats with trusted entities’ only for purposes such as:
• Our knowledge, and offer of information that may be of interest to you;
• Universities, laboratories and other entities that conduct scientific research; and
• Media research companies for general information only.

More information:

http://www.jpa-iac.com/en/
http://www.braxton-co.com/en/
http://www.tax-international.com/
http://www.braxton-group.com/

Note on International Tax Regimes

Note on International Tax Regimes
Mihir A. Desai (Harvard Business School) posted the note at HBS Publishing Case No.: 9-206-014

Here is the Abstract:

Provides a framework for understanding different types of international tax regimes. Examines how alternative tax regimes tax the foreign income of their citizens (including corporate citizens); how tax regimes define foreign and domestic income; and how foreign tax credits and deductions are used in worldwide tax regimes to mitigate double taxation. Discusses in detail the current U.S. system of worldwide taxation and the managerial incentives created by the U.S. tax system.

Available at SSRN: http://ssrn.com/abstract=924675

Reaganomics at 25

Well deserved to view editorial in the Weekend Wall Street Journal, entitled Reaganomics at 25:

Twenty-five years ago this weekend, Ronald Reagan signed the Economic Recovery Tax Act. The bill cut personal income tax rates by 25% across the board, indexed tax brackets for inflation and reduced the corporate income tax rate. The anniversary is worth commemorating as a seminal moment that continues to influence policy for the better in the U.S., and around the globe....

[T]he top marginal personal and corporate tax rates are 35%, compared with 70% and 48% in 1981. In the late 1970s the tax on dividends was 70% and the capital gains rate was 50%; now they're both 15%....

The rest of the world, meanwhile, has followed the Gipper down the tax-cut curve. Daniel Mitchell of the Heritage Foundation finds that the average personal income tax rate in the industrialized world is now 43%, versus 67% in 1980. The average top corporate tax rate has fallen to 29% from 48%. This decline in global tax rates has been the economic counterpart to the fall of the Berlin Wall. Most of Eastern Europe has adopted flat tax rates of 25% or lower, and the Russians now have a flat income tax of 13%. In Old Europe, Ireland's corporate and personal income tax rate cuts have helped generate the swiftest economic growth in the EU.

LLCs are up, Corporations are down

Are Corporations Going the Way of the Edsel?
Posted by Peter Lattman, from http://blogs.wsj.com/law.

LLC’s are way up and corporations are down, according to the latest data from the International Association of Commercial Administrators, which collects state-by-state filings.
Limited Liability Companies are popular because, like corporations, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like those in partnerships, providing management flexibility and the benefit of pass-through taxation. Here’s the IRS site on LLCs.

Thanks to Larry Ribstein at Ideoblog, here’s the IACA report, which shows that filings for LLCs are up in almost every state, while filings for corporations are down in most states. Of the 35 states with filing data for the past four years, 32 reported increases in LLC filings and 21 reported decreases in corporation filings.

As Ribstein puts it, “the corporate form is hanging on — it’s what most practitioners know. But it’s looking less and less like the future of business associations.”