Aggressive Tax Planning and Corporate Tax Avoidance: The Case Study
There have been increasing literature on aggressive tax planning and corporate tax avoidance, which focus on economic consequences (Ksovreli, 2015; Hanlon & Heitzman, 2010). Campaigners have targeted tax-avoiding corporations through the media, citing the enormous amount of tax losses (Hasseldine, Holland & Van der Rijt, 2012). It is pertinent that policy-makers and tax authorities to take action against tax avoiders and tax intermediaries. This paper focuses on the tax avoidance structures identified during tax audits and investigations and further contributes to an understanding of tax avoidance structures and models. The key models identified are related to the abuse of tax incentives and the use of corporate restructuring to minimize or reduced tax exposures. Based on the Case Management System of the Inland Revenue Board of Malaysia, we identify the key structures, their roles and incentives, and outline the tax avoidance schemes. The study summarizes a range of policy responses to tax avoidance, including anti-avoidance rules, disclosure rules and the regulation of tax intermediaries such as tax practitioners.
Arel-Bundock, V. (2017). The Unintended Consequences of Bilateralism: Treaty Shopping and International Tax Policy. International Organization, 71, 349-371.
Arukesamy, K. (2018). IRB to Adress Tax evasion loopholes. The Sun Daily, 07 February 2018. Available at: https://www.thesundaily.my/archive/irb-address-tax-evasion-loopholes-updated-YUARCH524403
Bergin, T. (2012). Special Report: How Starbucks Avoid UK Taxes. Online Reuters, 15 October 2012. Accessed 19 April 2018.
Brohier, M. (2018). IRB Cracking Down On Tax Evaders To Ensure Success Of Collection Target. https://www.imoney.my/articles/aggressive-tax-collection
Cobham, A. & Jansky, P. (2018). Global Distribution of Revenue Loss from Corporate Tax Avoidance: Re-estimation and Country Results. Journal of International Development, 30, 206-232.
Drozdiak, N. & Schechner, S. (2016). Apple Ordered by EU to Repay $14.5 Billion in Irish Tax Breaks. The Wall Street Journal. Available at: http://www.wsj.com/articles/apple-received-14-5-billion-in-illegal-tax-benefits-from-ireland-1472551598
ENRON: The Joint Committee on Taxation’s Investigative Report (2003). Committee of Finance. 108-117. Available at: https://www.finance.senate.gov/imo/media/doc/89349.pdf.
Geoghegan, B. (2012). UK Uncut Protests over Starbucks ‘Tax Avoidance’. Online BBC, 8 December 2012. Available at: < http://www.bbc.com/news/uk-20650945> [Accessed 30 August 2018] record/8905597/file/8905599.pdf.
Hanlon, M. & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50 (1-2), 127-178.
Hasseldine, J., Holland, K. & Van der Rijt, P. (2012). Companies and taxes in the UK: Actors, actions, consequences and responses. eJournal of Tax Research, 10 (3). 532.
Henry, J. S. (2012). The price of offshore revisited: New estimates for missing global private wealth income inequality and lost taxes. Tax Justice Network, available at: www. taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf (accessed 26 July 2018).
Kasperkevic, J. (2016). Forget Panama: it is easier to hide your money in the US than almost anywhere. The Guardian, New York. Available at: https://www.theguardian.com/us-news/2016/apr/06/panama-papers-us-tax-havens-delaware.
Ksovreli, I. (2015). Aggressive Tax Planning – Challenge of the Digital Era (Schemes, Problems Caused and Remedies). Available online:lup.lub.lu.se/student-papers/
Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg (2014). International Consortium of Investigative Journalists. Available from: https://www.icij.org/investigations/luxembourg-leaks/leaked-documents-expose-global-companies-secret-tax-deals-luxembourg/iPolitics (2014), Advance income tax rulings tipping off CRA to aggressive tax planning schemes: Ferguson
Lisowsky, P. (2010). Seeking shelter: Empirically modelling tax shelters using financial statement information. The Accounting Review, 85(5), 1693-1720.
Mauritius Economy 2018 (2018). CIA World Factbook. Available online: https://theodora.com/wfbcurrent/mauritius/mauritius_economy.html
Morgan, J. (2016). Corporation Tax as a Problem of MNC as Organizational Circuits: The Case for Unitary Taxation. The British Journal of Politics and International Relations 18: 463–81.
OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris.
Olbert, M. & Spengel, C. (2017). International Taxation in the Digital Economy: Challenge Accepted?. World Tax Journal. February, 2017. 3-46
Ratna, I. (2017). The Malaysian Reserve: IRB to set up a special team to address tax avoidance issues. The Malaysian Reserve. Available at: https://themalaysianreserve.com/2017/07/26/irb-set-special-team-address-tax-avoidance-issues/
Swanson, A. (2016). How the U.S. became one of the world's biggest tax havens. Washington Post. Retrieved April 23, 2017. Available at: http://ticotimes.net/2016/04/05/u-s-one-worlds-biggest-tax-havens
The European Commission (2015). The Commission Decides Selective Tax Advantages for Fiat in Luxembourg and Starbucks in the Netherlands Are Illegal under EU State Aid Rules. The European Commission - Press Release. Brussels, October 21. Available online: http://europa.eu/rapid/press-release_IP-15-5880_ en.htm (accessed on 27 December 2017)
The European Commission (2016). State Aid: Ireland Gave Illegal Tax Benefits to Apple Worth up to €13 billion. Press release. Brussels, August 30. Available online: http://europa.eu/rapid/press-release_IP-16-2923_en. htm (accessed on 5 January 2018).
Turner, G. (2017). New estimates reveal the extent of tax avoidance by multinationals, Tax Justice Network. Available online: https://www.taxjustice.net /2017/03/22/new-estimates-tax-avoidance-multinationals/
VanDenburgh, J. T. (2012). Closing International Loopholes: Changing the Corporate Tax Base to Effectively Combat Tax Avoidance, Valparaiso University Law Review, 47(1). 313-355. Available at: http://scholar.valpo.edu/vulr/vol47/iss1/8.
Vicentes, E. D. (2017). Can Blockchain Saved Offshore Banks?. ICO Services. https://medium.com/@icoservices/can-blockchain-save-offshore-banks-993ed84ebbd0.
Yang, J. G. S. & Metallo, V. N. A. (2018). The Emerging International Taxation Problems. International Journal of Financial Studies, 6(1). 1-10.
Zolt, E. M (2016). Designing Effective Tax Incentives: Maximizing the Benefits and Minimizing the Costs. Proceeding of Singopore Management University. UCLA School of Law, Singapore. Available at: https://accountancy.smu.edu.sg/cet/system/files/cet/download/Designing
Copyright (c) 2019 Indian-Pacific Journal of Accounting and Finance
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright of all articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) belongs to their respective authors. Site users are permitted to download and print the articles for personal use. Further reproduction and/or distribution is not permitted, except for brief excerpts or quotations intended for inclusion in some other original works. In this case, proper attribution must be made to the author/copyright holder, and the place of publication must be acknowledged. Altering, editing or otherwise modifying the content of information obtained from the Indian Pacific Journal of Accounting and Finance (IPJAF) is a breach of copyright.
While you retain the copyright of your original material, by publishing in the Indian Pacific Journal of Accounting and Finance (IPJAF) , you will have agreed to the following contractual terms:
- The article is the original work of the stated author(s).
- The work has not been published previously.
- If the Article contains copyright material owned by others, written permission has been obtained from the copyright owner(s) to republish such material in any print or electronic medium and that you have included appropriate acknowledgement of such rights in the Article.
- The author agrees to grant a non-exclusive license to the Indian Pacific Journal of Accounting and Finance (IPJAF) to communicate the work to the public.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may use the article for publicity purposes.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may publish the article on third-party sites.
- Any subsequent publication of the article by the authors will carry the acknowledgement: First published in the Indian Pacific Journal of Accounting and Finance (IPJAF) [http://ipjaf.omjpalpha.com]
The Indian Pacific Journal of Accounting and Finance (IPJAF) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.