1.
Tax evasion
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Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion is an activity associated with the informal economy. In contrast, tax avoidance is the use of tax laws to reduce ones tax burden. In 1968, Nobel laureate economist Gary Becker first theorized the economics of crime, allingham and A. Sandmo produced, in 1972, an economic model of tax evasion. This model deals with the evasion of tax, the main source of tax revenue in developed countries. According to the authors, the level of evasion of income tax depends on the detection probability, the literatures theoretical models are elegant in their effort to identify the variables likely to affect non-compliance. Alternative specifications, however, yield conflicting results concerning both the signs and magnitudes of variables believed to affect tax evasion, empirical work is required to resolve the theoretical ambiguities. Income tax evasion appears to be influenced by the tax rate, the unemployment rate. The U. S. Tax Reform Act of 1986 appears to have reduced tax evasion in the United States, customs duties are an important source of revenue in developing countries. Importers purport to evade customs duty by under-invoicing and misdeclaration of quantity, when there is ad valorem import duty, the tax base can be reduced through underinvoicing. Misdeclaration of quantity is more relevant for products with specific duty, production description is changed to match a H. S. Code commensurate with a lower rate of duty. Smuggling is importation or exportation of products by illegal means. Smuggling is resorted to for total evasion of customs duties, as well as for the importation of contraband, during the second half of the 20th century, value-added tax emerged as a modern form of consumption tax throughout the world, with the notable exception of the United States. Producers who collect VAT from consumers may evade tax by under-reporting the amount of sales, the US has no broad-based consumption tax at the federal level, and no state currently collects VAT, the overwhelming majority of states instead collect sales taxes. Canada uses both a VAT at the level and sales taxes at the provincial level, some provinces have a single tax combining both forms. In addition, most jurisdictions which levy a VAT or sales tax also legally require their residents to report and this is especially prevalent in federal countries like Nigeria, US and Canada where sub-national jurisdictions charge varying rates of VAT or sales tax. In Nigeria, for example, some federated states enforce VAT on each item of goods sold by traders, the price must be clearly stated and the VAT shown separately from the basic price. If the trader does not comply this is punishable as an attempt to siphon the VAT, therefore, it is not generally cost-effective to enforce tax collection on low-value goods carried in private vehicles from one jurisdiction to another with a different tax rate
2.
Tax
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A tax is a financial charge or other levy imposed upon a taxpayer by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent, the legal definition and the economic definition of taxes differ in that economists do not regard many transfers to governments as taxes. For example, some transfers to the sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments, governments also obtain resources by creating money and coins, through voluntary gifts, by imposing penalties, by borrowing, and by confiscating wealth. In modern taxation systems, governments levy taxes in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states, the method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the Canada Revenue Agency, when taxes are not fully paid, the state may impose civil penalties or criminal penalties on the non-paying entity or individual. The levying of taxes aims to raise revenue to fund governing and/or to alter prices in order to affect demand, States and their functional equivalents throughout history have used money provided by taxation to carry out many functions. A governments ability to raise taxes is called its fiscal capacity, when expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may be used to service past debts, governments also use taxes to fund welfare and public services. These services can include education systems, pensions for the elderly, unemployment benefits, energy, water and waste management systems are also common public utilities. A tax effectively changes relative prices of products and they have therefore sought to identify the kind of tax system that would minimize this distortion. Governments use different kinds of taxes and vary the tax rates, historically, taxes on the poor supported the nobility, modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working. A states tax system often reflects its communal values and the values of those in current political power. To create a system of taxation, a state must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing or administering the tax system, in countries where the public does not have a significant amount of influence over the system of taxation, that system may reflect more closely the values of those in power. All large businesses incur administrative costs in the process of delivering revenue collected from customers to the suppliers of the goods or services being purchased. Taxation is no different, the resource collected from the public through taxation is always greater than the amount which can be used by the government, the difference is called the compliance cost and includes the labour cost and other expenses incurred in complying with tax laws and rules
3.
Tax shelter
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Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments. The methodology can vary depending on local and international tax laws, in North America, a tax shelter is generally defined as any method that recovers more than $1 in tax for every $1 spent, within 4 years. Some tax shelters are questionable or even illegal, Offshore companies, due to differing tax rates and legislation in each country, tax benefits can be exploited. Example, If Import Co. buys $1 of goods from India and sells for $3 and this allows Import Co. to report taxable income of $0, thus paying no tax. While the subsidiary will have to pay tax on $2, the tax is payable to the tax authority of British Virgin Islands, since the British Virgin Islands has a corporate tax rate of 0%, no taxes are payable. By paying unreasonably high interest rates to a party, one may severely reduce the income of an investment. The tax benefit derives from the fact that capital gains are taxed at a lower rate than the investment income such as interest or dividend. The flaws of these tax shelters are usually that transactions were not reported at fair market value or the interest rate was too high or too low. The agency may re-evaluate the price, and will quickly neutralize any over tax benefits, however, such cases are difficult to prove. A soft drink from a machine can cost $1.75. To prove that the price is in fact unreasonable may turn out to be reasonably difficult itself, other tax shelters can be legal and legitimate, Flow-through shares/limited partnerships. Certain companies, such as mining or oil drilling often take years before they can generate positive income. This normally deters common investors who demand quick, or at least safe, to encourage the investment, the US government allows the exploration costs of the company to be distributed to shareholders as tax deductions. Investors are rewarded by 1) the near instant tax savings 2) the potential massive gains if the company discovers gold or oil. In US terminology, these entities are given the title of limited partnership and in the past they may have simply been called a tax shelter. However the IRS limited the popularity of these plans by allowing the losses to only offset passive income as opposed to earned income, in order to reduce burden of the government-funded pension systems, governments may allow individuals to invest in their own pension. In the USA these sanctioned programs include Individual Retirement Accounts and 401s, the contributed income will not be taxable today, but will be taxable when the individual retires. The advantage to these plans is that money that would have taken out as taxes is now compounded in the account until the funds are withdrawn
4.
Tax haven
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A tax haven is a jurisdiction that offers favorable tax or other conditions to its taxpayers as relative to other jurisdictions. There is no accepted definition of what renders a country or jurisdiction a tax haven. The term most commonly refers to countries or jurisdictions that have a low-tax or no-tax regime or which offer generous tax incentives. Some refer to secrecy jurisdictions as an alternative to tax havens to emphasise the element. Earnings from income generated from real estate can also be eliminated in this way, if taxes are paid in the tax haven jurisdiction, companies can avoid taxes in their home jurisdiction because the tax had already been paid in the lower tax rate jurisdiction. The only thing that can be done is picking a country that has the smallest rates on these taxes before buying any real estate, individuals or corporate entities may establish shell subsidiaries or move themselves to areas with reduced or no taxation levels relative to typical international taxation. This creates a situation of tax competition among jurisdictions, different jurisdictions may be havens for different types of taxes, and for different categories of people or companies. Sovereign jurisdictions or self-governing territories under international law have the power to tax laws affecting their territories. A2012 report by the British Tax Justice Network estimated that between US$21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns 3% annually and such capital gains were taxed at 30%, if such hidden offshore assets are considered, many countries with governments nominally in debt are shown to be net creditor nations. Another recent study estimated the amount of global offshore wealth at the smaller—but still sizable—figure of US$7.6 trillion and this estimate included financial assets only, My method probably delivers a lower bound, in part because it only captures financial wealth and disregards real assets. After all, high-net-worth individuals can stash works of art, jewelry, and gold in freeports, warehouses that serve as repositories for valuables—Geneva, Luxembourg, high-net-worth individuals also own real estate in foreign countries. A study of 60 large US companies found that they deposited $166 billion in offshore accounts during 2012, there are several definitions of tax havens. In 2002 The Economist adopted the description by Geoffrey Colin Powell, the Economist points out that this definition would still exclude a number of jurisdictions traditionally thought of as tax havens. Similarly, an Australian journalist suggested that any country which modifies its tax laws to attract foreign capital could be considered a tax haven. According to other definitions, the feature of a haven is that its laws. This prevents the transmittance of information about taxpayers who are benefiting from the low tax jurisdiction, lack of transparency – A lack of transparency in the operation of the legislative, legal or administrative provisions is another factor used to identify tax havens. The OECD is concerned that laws should be applied openly and consistently, lack of transparency in one country can make it difficult, if not impossible, for other tax authorities to apply their laws effectively
5.
Public opinion
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The desires, wants, and thinking of the majority of the people – or the collective opinion of the people of a society or state on an issue or problem – is called public opinion. The term was derived from the French word lopinion, which was first used in 1588 by Michel de Montaigne and this concept came about through the process of urbanization and other political and social forces. For the first time, it became important what people thought, active citizens would then use this knowledge to participate in their government, while also being able to inform other citizens of current issues. In terms of science, public opinion is defined as being the aggregate of public attitudes or beliefs about government or politics. Public opinion is considered to be the factor that guides an indirect democratic government and it is only through the approval of the public that a government gains the authority to function. Public opinion is thought to develop from these sources, political socialization, education, life experience, political parties, the media. Public opinion is considered a part of todays government. Continually changing, it has the power and influence to shape the government in new ways, the emergence of public opinion as a significant force in the political realm can be dated to the late 17th century. However, opinion had been regarded as having singular importance since far earlier, medieval fama publica or vox et fama communis had great legal and social importance from the 12th and 13th centuries onward. Later, William Shakespeare called public opinion the mistress of success, William Temple in his essay of 1672, On the Original and Nature of Government gave an early formulation of the importance of public opinion. He observed that. when vast numbers of men submit their lives and fortunes absolutely to the will of one, it. must be force of custom, or opinion. which subjects power to authority. Temple disagreed with the prevalent opinion that the basis of government lay in a social contract, during the 18th century religious literature was replaced with secular literature, novels and pamphlets. In parallel to this was the growth in reading societies and clubs, at the turn of the century the first circulating library opened in London and the public library became widespread and available to the public. An institution of central importance in the development of opinion, was the coffee-house. For several decades following the Restoration, the Wits gathered round John Dryden at Wills Coffee House, in Russell Street, the coffee houses were great social levellers, open to all men and indifferent to social status, and as a result associated with equality and republicanism. More generally, coffee houses became meeting places where business could be carried on, news exchanged, lloyds of London had its origins in a coffeehouse run by Edward Lloyd, where underwriters of ship insurance met to do business. Joseph Addison wanted to have it said of him that he had brought out of closets and libraries to dwell in clubs and assemblies, at tea tables. According to one French visitor, Antoine François Prévost, coffeehouses, gentlemens clubs proliferated in the 18th century, especially in the West End of London
6.
Journalism
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Journalism is the production and distribution of reports on the interaction of events, facts, ideas, and people that are the news of the day and that informs society to at least some degree. The word applies to the occupation, the methods of gathering information, journalistic media include, print, television, radio, Internet, and, in the past, newsreels. Concepts of the role for journalism varies between countries. In some nations, the media is controlled by a government intervention. In others, the media is independent from the government. In the United States, journalism is protected by the freedom of the clause in the First Amendment. The role and status of journalism, along with that of the media, has undergone changes over the last two decades with the advent of digital technology and publication of news on the Internet. Notably, in the American media landscape, newsrooms have reduced their staff and coverage as traditional media channels, such as television, for instance, between 2007 and 2012, CNN edited its story packages into nearly half of their original time length. This compactness in coverage has been linked to broad audience attrition, in the United States, journalism is produced by media organizations or by individuals. Bloggers are often, but not always, journalists, the Federal Trade Commission requires that bloggers who receive free promotional gifts, then write about products, must disclose that they received the products for free. This is to eliminate conflicts of interest and protect consumers, fake news is news that is not truthful or is produced by unreliable media organizations. Fake news is spread on social media. Readers can determine fake news by evaluating whether the news has been published by a news organization. In the US, a news organization is an incorporated entity, has an editorial board. All of these organizations have codes of ethics that members abide by, many news organizations have their own codes of ethics that guide journalists professional publications. The New York Times code of standards and ethics is considered particularly rigorous, when they write stories, journalists are concerned with issues of objectivity and bias. Some types of stories are intended to represent the authors own opinion, in a physical newspaper, information is organized into sections and it is easy to see which stories are supposed to be opinion and which are supposed to be neutral. Online, many of these distinctions break down, readers should pay careful attention to headings and other design elements to ensure that they understand the journalists intent
7.
Tax mitigation
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Tax avoidance is the legal usage of the tax regime in a single territory to ones own advantage to reduce the amount of tax that is payable by means that are within the law. Tax sheltering is very similar, although unlike tax avoidance tax sheltering is not necessarily legal, Tax havens are jurisdictions which facilitate reduced taxes. While forms of tax avoidance which use tax laws in ways not intended by governments may be considered legal, many corporations and businesses which take part in the practice experience a backlash, either from their active customers or online. Since 1995, trillions of dollars have been transferred from OECD, though the specifics may vary according to jurisdiction, these rules invalidate tax avoidance which is technically legal but not for a business purpose or in violation of the spirit of the tax code. Related terms for tax avoidance include tax planning and tax sheltering, Tax evasion, on the other hand, is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Both tax evasion and some forms of tax avoidance can be viewed as forms of tax noncompliance, a company may choose to avoid taxes by establishing their company or subsidiaries in an offshore jurisdiction. Individuals may also avoid tax by moving their tax residence to a tax haven, such as Monaco and they may also reduce their tax by moving to a country with lower tax rates. However, a number of countries tax their citizens on their worldwide income regardless of where they reside. As of 2012, only the United States and Eritrea have such a practice, whilst Finland, France, Hungary, Italy, in cases such as the US, taxation cannot be avoided by simply transferring assets or moving abroad. U. S. citizens therefore cannot avoid U. S. taxes simply by emigrating from the U. S, the 2012 limit on the amount that can be excluded is US$95,100. Most countries impose taxes on income earned or gains realized within that country regardless of the country of residence of the person or firm, to avoid tax, it is usually not enough to simply move ones assets to a tax haven. One must also move to a tax haven to avoid tax. Without changing country of residence, personal taxation may be avoided by the creation of a separate legal entity to which ones property is donated. The separate legal entity is often a company, trust, or foundation and these may also be located offshore, such as in the case of many private foundations. Assets are transferred to the new company or trust so that gains may be realized, or income earned, if assets are later transferred back to an individual, then capital gains taxes would apply on all profits. Also income tax would still be due on any salary or dividend drawn from the legal entity, for a settlor to avoid tax there may be restrictions on the type, purpose and beneficiaries of the trust. For example, the settlor of the trust may not be allowed to be a trustee or even a beneficiary, Tax results depend on definitions of legal terms which are usually vague. For example, vagueness of the distinction between business expenses and personal expenses is of concern for taxpayers and tax authorities
8.
OECD
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The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 35 member countries, founded in 1960 to stimulate economic progress and world trade. Most OECD members are high-income economies with a very high Human Development Index and are regarded as developed countries, in 1948, the OECD originated as the Organisation for European Economic Co-operation, led by Robert Marjolin of France, to help administer the Marshall Plan. This would be achieved by allocating American financial aid and implementing programs for the reconstruction of Europe after World War II. The OECDs headquarters are at the Château de la Muette in Paris, the OECD is funded by contributions from member states at varying rates. And had a budget of EUR363 million in 2015. It started its operations on 16 April 1948, and originated from the work done by the Committee of European Economic Co-operation in 1947 in preparation for the Marshall Plan, since 1949, it was headquartered in the Château de la Muette in Paris, France. After the Marshall Plan ended, the OEEC focused on economic issues, in 1958, a European Nuclear Energy Agency was set up under the OEEC. By the end of the 1950s, with the job of rebuilding Europe effectively done, some leading countries felt that the OEEC had outlived its purpose and this reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members. It would also set to work away on bringing in Japan. Following the 1957 Rome Treaties to launch the European Economic Community, the Convention was signed in December 1960 and the OECD officially superseded the OEEC in September 1961. It consisted of the European founder countries of the OEEC plus the United States and Canada, the official founding members are, During the next 12 years Japan, Finland, Australia, and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation starting with the establishment of the OECD until its dissolution as a country, the OECD created agencies such as the OECD Development Centre, International Energy Agency, and Financial Action Task Force on Money Laundering. Unlike the organizations of the United Nations system, OECD uses the spelling organisation with an s in its name rather than organization, in 1989, after the Revolutions of 1989, the OECD started to assist countries in Central Europe to prepare market economy reforms. This programme also included an option for these countries. As a result of this, Poland, Hungary, the Czech Republic, in the 1990s, a number of European countries, now members of the European Union, expressed their willingness to join the organisation. In 1995, Cyprus applied for membership, but, according to the Cypriot government, in 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become full members of the OECD. Slovenia also applied for membership that same year, in 2005, Malta applied to join the organisation. The EU is lobbying for admission of all EU member states, Romania reaffirmed in 2012 its intention to become a member of the organisation through the letter addressed by the Romanian Prime Minister Victor Ponta to OECD Secretary-General José Ángel Gurría
9.
Developing country
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Also, the general term less-developed country should not be confused with the specific least developed country. The term developing describes a currently observed situation and not a dynamic or expected direction of progress, since the late 1990s developing countries tended to demonstrate higher growth rates than the developed ones. There is criticism of the use of the developing country. The term implies inferiority of a country or undeveloped country compared with a developed country. It assumes a desire to develop along the traditional Western model of development which a few countries, such as Cuba and Bhutan. An alternative measurement that has suggested is that of gross national happiness. Countries on the boundary between developed and developing are often categorized under the newly industrialized countries. In the 2016 edition of its World Development Indicators, the World Bank made a decision to no longer distinguish between “developed” and “developing” countries in the presentation of its data, nobody has ever agreed on a definition for these terms in the first place. Various terms are used for whatever is not a developed country, terms used include less developed country or less economically developed country, and for the more extreme, least developed country or least economically developed country. But according to the United Nations Statistics Division, There is no established convention for the designation of developed, the World Bank classifies countries into four income groups. These are set each year on July 1, economies were divided according to 2016 GNI per capita using the following ranges of income, Low income countries had GNI per capita of US$1,025 or less. Lower middle income countries had GNI per capita between US$1,026 and US$4,035, upper middle income countries had GNI per capita between US$4,036 and US$12,475. High income countries had GNI per capita above US$12,476 and this may be by absolute numbers or country ranking. The UN has developed the Human Development Index, an indicator of the above statistics. The UN sets Millennium Development Goals from a blueprint developed by all of the countries and leading development institutions. There is an association between low income and high population growth. The terms utilized when discussing developing countries refer to the intent, other terms sometimes used are less developed countries, least economically developed countries, underdeveloped nations or Third World nations, and non-industrialized nations. Conversely, developed countries, most economically developed countries, First World nations and that is, LEDCs are the poorest subset of LDCs
10.
Gregory v. Helvering
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Gregory v. Helvering,293 U. S.465, was a landmark decision by the United States Supreme Court concerned with U. S. income tax law. The case is cited as part of the basis for two legal doctrines, the business purpose doctrine and the doctrine of substance over form, evelyn Gregory was the owner of all the shares of a company called United Mortgage Company. United Mortgage in turn owned 1,000 shares of stock of a company called Monitor Securities Corporation, on 18 September 1928 she created Averill Corp and three days after transferred the 1000 shares in Monitor to Averill. On 24 September she dissolved Averill and distributed the 1000 shares in Monitor to herself and she claimed there was a cost of $57,325.45, and she should be taxed on a capital net gain on $76,007.88. On her 1928 federal income tax return, Gregory treated the transaction as a tax free corporate reorganization, accordingly, she understated her liability by $10,000. In the ensuing litigation, the Board of Tax Appeals ruled in favor of the taxpayer, see Gregory v. Commissioner,27 B. T. A. On appeal the United States Court of Appeals for the Second Circuit reversed the Board of Tax Appeals, learned Hand J said the following in the course of his judgment. The Supreme Court of the United States also ruled in favor of the Commissioner, although the letter of the law might arguably have been complied with, the intention of the Act was not to allow reorganizations merely for the purpose of tax avoidance. In the course of its judgment, the Court said the following, michigan Law Review, Vol.37, No.4. The Duke and the Lady, Helvering v. Gregory and the History of Tax Avoidance Adjudication
11.
Corporation
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A corporation is a company or group of people authorized to act as a single entity and recognized as such in law. Early incorporated entities were established by charter, most jurisdictions now allow the creation of new corporations through registration. Corporations chartered in regions where they are distinguished by whether they are allowed to be for profit or not are referred to as for profit and not-for-profit corporations, there is some overlap between stock/non-stock and for profit/not-for-profit in that not-for-profit corporations are always non-stock as well. A for profit corporation is almost always a stock corporation, registered corporations have legal personality and are owned by shareholders whose liability is limited to their investment. Shareholders do not typically actively manage a corporation, shareholders instead elect or appoint a board of directors to control the corporation in a fiduciary capacity, in American English, the word corporation is most often used to describe large business corporations. In British English and in the Commonwealth countries, the company is more widely used to describe the same sort of entity while the word corporation encompasses all incorporated entities. In American English, the company can include entities such as partnerships that would not be referred to as companies in British English as they are not a separate legal entity. Despite not being human beings, corporations, as far as the law is concerned, are legal persons. Corporations can exercise human rights against real individuals and the state, Corporations can be dissolved either by statutory operation, order of court, or voluntary action on the part of shareholders. Corporations can even be convicted of offenses, such as fraud. However, corporations are not considered living entities in the way humans are. While not a corporation, this new type of entity became very attractive as an alternative for corporations not needing to issue stock, in Germany, the organization was referred to as Gesellschaft mit beschränkter Haftung or GmbH. In the last quarter of the 20th Century this new form of organization became available in the United States and other countries. Since the GmbH and LLC forms of organization are technically not corporations they will not be discussed in this article, the word corporation derives from corpus, the Latin word for body, or a body of people. By the time of Justinian, Roman law recognized a range of corporate entities under the names universitas and these included the state itself, municipalities, and such private associations as sponsors of a religious cult, burial clubs, political groups, and guilds of craftsmen or traders. Such bodies commonly had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, private associations were granted designated privileges and liberties by the emperor. Entities which carried on business and were the subjects of rights were found in ancient Rome. In medieval Europe, churches became incorporated, as did local governments, such as the Pope, the point was that the incorporation would survive longer than the lives of any particular member, existing in perpetuity
12.
Trust law
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A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers property to a trustee, the trustee holds that property for the trusts beneficiaries. Trusts exist mainly in common law jurisdictions and similar systems existed since Roman times and this may be done for tax avoidance reasons or to control the property and its benefits if the settlor is absent, incapacitated, or deceased. Trusts are frequently created in wills, defining how money and property will be handled for children or other beneficiaries, the trustee is given legal title to the trust property, but is obligated to act for the good of the beneficiaries. The trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits from the trust properties, Trustees who violate this fiduciary duty are self-dealing. Courts can reverse self-dealing actions, order profits returned, and impose other sanctions, the trustee may be either an individual, a company, or a public body. There may be a trustee or multiple co-trustees. The trust is governed by the terms under which it was created, in most jurisdictions, this requires a contractual trust agreement or deed. A trust is created by a settlor, who transfers title to some or all of his or her property to a trustee, the trust is governed by the terms under which it was created. In most jurisdictions, this requires a contractual trust agreement or deed and it is possible for a single individual to assume the role of more than one of these parties, and for multiple individuals to share a single role. For example, in a living trust it is common for the grantor to be both a trustee and a beneficiary, while naming other contingent beneficiaries. Trusts have existed since Roman times and have one of the most important innovations in property law. Trust law has evolved through court rulings differently in different states, so statements in this article are generalizations, States are adapting the Uniform Trust Code to codify and harmonize their trust laws, but state-specific variations still remain. An owner placing property into trust turns over part of his or her bundle of rights to the trustee, separating the propertys legal ownership and control from its equitable ownership and benefits. This may be done for tax reasons or to control the property and its benefits if the settlor is absent, incapacitated, testamentary trusts may be created in wills, defining how money and property will be handled for children or other beneficiaries. While the trustee is given legal title to the trust property, in accepting the property title, the primary duties owed include the duty of loyalty, the duty of prudence, the duty of impartiality. A trustee may be held to a high standard of care in their dealings. In addition, a trustee has a duty to know, understand, the trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits from the trust properties
13.
Tax noncompliance
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Tax noncompliance is a range of activities that are unfavorable to a states tax system. This may include tax avoidance, which is tax reduction by legal means, the use of the term noncompliance is used differently by different authors. Its most general use describes non-compliant behaviors with respect to different institutional rules resulting in what Edgar L. Feige calls unobserved economies. Non-compliance with fiscal rules of taxation, gives rise to unreported income, in the United States the use of the term noncompliance often refers only to illegal misreporting. In addition, judicial doctrines have accomplished the purpose, notably in the United States through the business purpose. Though the specifics may vary according to jurisdiction, these rules invalidate tax avoidance which is technically legal, related terms for tax avoidance include tax planning and tax sheltering. Individuals that do not comply with tax payment include tax protesters, Tax protesters attempt to evade the payment of taxes using alternative interpretations of the tax law, while tax resisters refuse to pay a tax for conscientious reasons. Tax protesters believe that taxation under the Federal Reserve is unconstitutional, because taxation is often perceived as onerous, governments have struggled with tax noncompliance since the earliest of times. The use of the tax avoidance and tax evasion can vary depending on the jurisdiction. In general, the term applies to illegal actions and avoidance to actions within the law. An avoidance/evasion distinction along the lines of the present distinction has long been recognised, in 1860 Turner LJ suggested evasion/contravention, Fisher v Brierly. In 1900 the distinction was noted as two meanings of the word “evade”, Bullivant v AG, the technical use of the words avoidance/evasion in the modern sense originated in the USA where it was well established by the 1920s. It can be traced to Oliver Wendell Holmes in Bullen v. Wisconsin and it was slow to be accepted in the United Kingdom. By the 1950s, knowledgeable and careful writers in the UK had come to distinguish the term “tax evasion” from “avoidance”. However, in the UK at least, “evasion” was regularly used in the sense of avoidance, in law reports and elsewhere, now that the terminology has received official approval in the UK this usage should be regarded as erroneous. But even now it is helpful to use the expressions “legal avoidance” and “illegal evasion”. In the United States tax evasion is evading the assessment or payment of a tax that is legally owed at the time of the criminal conduct. Tax evasion is criminal, and has no effect on the amount of tax actually owed, by contrast, the term tax avoidance describes lawful conduct, the purpose of which is to avoid the creation of a tax liability in the first place
14.
Offshore financial centre
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An offshore financial centre is a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds. The term was coined in the 1980s, whether a financial centre is to be characterized as offshore is a question of degree. The more nebulous term tax haven is often applied to offshore centres, a 1981 report by the United States Internal Revenue Service concluded, a country is a tax haven if it looks like one and if it is considered to be one by those who care. Views of offshore financial centres tend to be polarised, proponents point to the tacit support of offshore centres by the governments of the United States and United Kingdom. Opponents view them as draining tax revenues away from developed countries by allowing tax arbitrage, very few commentators express neutral views. One could argue that US external aid statutorily cannot even take place without the formation of offshore entities, in 2000 the FATF began a policy of assessing the cooperation of all countries in programmes against money laundering. Considerable tightening up of both regulation and implementation was noted by the FATF over subsequent years, most of the principal offshore centres considerably strengthened their internal regulations relating to money laundering and other key regulated activities. Indeed, Jersey is now rated as the most compliant jurisdiction internationally, well-run jurisdictions of all sorts, whether nominally on- or offshore, are good for the global financial system. The Channel Islands hold that funds generated offshore do indeed go through the Bank of England allowing the UK to benefit from the success of the crown dependencies as offshore centres, offshore centres benefit from a low burden of regulation. An extremely high proportion of funds who register offshore are presumed to be driven by lighter regulatory requirements rather than perceived tax benefits. Offshore centres have historically seen as venues for laundering the proceeds of illicit activity. The leading offshore financial centres are more compliant with the Financial Action Task Force on Money Launderings 40+9 recommendations than many OECD countries, a study by Australian academic found that shell companies are more easily set up in many OECD member countries than in offshore jurisdictions. A report by Global Witness, Undue Diligence, found that kleptocrats used OECD banks rather than offshore accounts as destinations for plundered funds, statutory banking secrecy is a feature of several financial centres, notably Switzerland and Singapore. However, many offshore financial centres have no statutory right. Offshore centres act as conduits for global trade and ease international capital flows, low-tax financial centres are becoming increasingly important as conduits for investment into emerging markets. Many corporate conglomerates employ a number of holding companies. Similarly, it is common for fleets of ships to be separately owned by separate offshore companies to try to circumvent laws relating to group liability under certain environmental legislation. These structures work best when the wealth is foreign-earned, or has been expatriated over a significant period of time, many countries from France to Saudi Arabia continue to employ forced heirship provisions in their succession law, limiting the testators freedom to distribute assets upon death
15.
Offshore company
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The term offshore company or offshore corporation is used in at least two distinct and different ways. The former use is probably the common usage of the term. In isolated instances the term can also be used in reference to companies with offshore oil, in relation to companies and similar entities which are incorporated in offshore jurisdictions, the use of both the words offshore and company can be varied in application. The extent to which a jurisdiction is regarded as offshore is often a question of perception, thereafter there are certain small intermediate countries or areas such as Hong Kong and Singapore which, whilst having oversized financial centres, are not zero tax regimes. Historically, offshore companies were divided into two categories. Such companies were usually called International Business Companies, or IBCs, such companies were largely popularized by the British Virgin Islands, but the model was copied widely. But IBCs are still incorporated in a number of jurisdictions today including Anguilla, where the home jurisdiction is regarded as an offshore jurisdiction, such companies are commonly regarded as offshore companies. Examples of this include Hong Kong and Uruguay, however, these tax regimes are not limited to conventional offshore jurisdictions, the United Kingdom operates on broadly similar principles in relation to taxation of companies. Separately there are jurisdictions which simply do not impose any form of taxation on companies. Historically the best example of countries were the Cayman Islands and Bermuda. These could arguably fit into either of the two categories, depending on the fiscal point of view involved. The corporate regime will be designed to promote business flexibility, regulation of corporate activities will normally be lighter than in a developed country. The absence of taxation or regulation in the jurisdiction does not, of course. Another common characteristic of offshore companies is the amount of information available to the public. This varies from jurisdiction to jurisdiction, at one end of the scale, in the Cayman Islands and Delaware, there is virtually no publicly available information. But at the end of the scale, in Hong Kong companies file annual returns with particulars of directors, shareholders. A number have also removed or watered down rules relating to maintenance of capital or restrictions on payment of dividends, offshore companies are used for a variety of commercial and private purposes, some legitimate and economically beneficial, whilst others may be harmful or even criminal. Allegations are frequently made in the press about offshore companies being used for money laundering, tax evasion, fraud, offshore companies are also used in a wide variety of commercial transactions from generic holding companies, to joint ventures and listing vehicles
16.
Monaco
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Monaco, officially the Principality of Monaco, is a sovereign city-state and microstate, located on the French Riviera in Western Europe. France borders the country on three sides while the other side borders the Mediterranean Sea, Monaco has an area of 2.02 km2 and a population of about 38,400 according to the last census of 2015. With 19,009 inhabitants per km², it is the second smallest, Monaco has a land border of 5.47 km, a coastline of 3.83 km, and a width that varies between 1,700 and 349 m. The highest point in the country is a pathway named Chemin des Révoires on the slopes of Mont Agel, in the Les Révoires Ward. Monacos most populous Quartier is Monte Carlo and the most populous Ward is Larvotto/Bas Moulins, through land reclamation, Monacos land mass has expanded by twenty percent, in 2005, it had an area of only 1.974 km2. Monaco is known as a playground for the rich and famous, in 2014, it was noted about 30% of the population was made up of millionaires, more than in Zürich or Geneva. Monaco is a principality governed under a form of constitutional monarchy, although Prince Albert II is a constitutional monarch, he wields immense political power. The House of Grimaldi have ruled Monaco, with brief interruptions, the official language is French, but Monégasque, Italian, and English are widely spoken and understood. The states sovereignty was recognized by the Franco-Monegasque Treaty of 1861. Despite Monacos independence and separate foreign policy, its defense is the responsibility of France, however, Monaco does maintain two small military units. Economic development was spurred in the late 19th century with the opening of the countrys first casino, Monte Carlo, since then, Monacos mild climate, scenery, and gambling facilities have contributed to the principalitys status as a tourist destination and recreation center for the rich. In more recent years, Monaco has become a major banking center and has sought to diversify its economy into services and small, high-value-added, the state has no income tax, low business taxes, and is well known for being a tax haven. It is also the host of the street circuit motor race Monaco Grand Prix. Monaco is not formally a part of the European Union, but it participates in certain EU policies, including customs, through its relationship with France, Monaco uses the euro as its sole currency. Monaco joined the Council of Europe in 2004 and it is a member of the Organisation Internationale de la Francophonie. Monacos name comes from the nearby 6th-century BC Phocaean Greek colony, according to an ancient myth, Hercules passed through the Monaco area and turned away the previous gods. As a result, a temple was constructed there, the temple of Hercules Monoikos, because the only temple of this area was the House of Hercules, the city was called Monoikos. It ended up in the hands of the Holy Roman Empire, an ousted branch of a Genoese family, the Grimaldi, contested it for a hundred years before actually gaining control
17.
International taxation
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Governments usually limit the scope of their income taxation in some manner territorially or provide for offsets to taxation relating to extraterritorial income. The manner of limitation generally takes the form of a territorial, residence-based, some governments have attempted to mitigate the differing limitations of each of these three broad systems by enacting a hybrid system with characteristics of two or more. Many governments tax individuals and/or enterprises on income, such systems of taxation vary widely, and there are no broad general rules. These variations create the potential for double taxation and no taxation, income tax systems may impose tax on local income only or on worldwide income. Generally, where income is taxed, reductions of tax or foreign credits are provided for taxes paid to other jurisdictions. Limits are almost universally imposed on such credits, multinational corporations usually employ international tax specialists, a specialty among both lawyers and accountants, to decrease their worldwide tax liabilities. With any system of taxation, it is possible to shift or recharacterize income in a manner that reduces taxation, jurisdictions often impose rules relating to shifting income among commonly controlled parties, often referred to as transfer pricing rules. Residency-based systems are subject to attempts to defer recognition of income through use of related parties. A few jurisdictions impose rules limiting such deferral, deferral is also specifically authorized by some governments for particular social purposes or other grounds. Agreements among governments often attempt to determine who should be entitled to tax what, most tax treaties provide for at least a skeleton mechanism for resolution of disputes between the parties. Systems of taxation vary among governments, making generalization difficult, specifics are intended as examples, and relate to particular governments and not broadly recognized multinational rules. Unless otherwise specified, the income should be read broadly. Jurisdictions often impose different income based levies on enterprises than on individuals, entities are often taxed in a unified manner on all types of income while individuals are taxed in differing manners depending on the nature or source of the income. Many jurisdictions impose tax at both an entity level and at the level on one or more types of enterprises. These jurisdictions often rely on the law of that jurisdiction or other jurisdictions in determining whether an entitys owners are to be taxed directly on the entity income. However, there are exceptions, including U. S. rules characterizing entities independently of legal form. In order to simplify administration or for other agendas, some governments have imposed deemed income regimes and these regimes tax some class of taxpayers according to tax system applicable to other taxpayers but based on a deemed level of income, as if earned by the taxpayer. Disputes can arise regarding what levy is proper, procedures for dispute resolution vary widely and enforcement issues are far more complicated in the international arena
18.
Eritrea
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Eritrea, officially the State of Eritrea, is a country in the Horn of Africa. With its capital at Asmara, it is bordered by Sudan in the west, Ethiopia in the south, the northeastern and eastern parts of Eritrea have an extensive coastline along the Red Sea. The nation has an area of approximately 117,600 km2. Its toponym Eritrea is based on the Greek name for the Red Sea, Eritrea is a multi-ethnic country, with nine recognized ethnic groups in its population of around six million. Most residents speak languages from the Afroasiatic family, either of the Ethiopian Semitic languages or Cushitic branches, among these communities, the Tigrinya make up about 55% of the population, with the Tigre people constituting around 30% of inhabitants. In addition, there are a number of Nilo-Saharan-speaking Nilotic ethnic minorities, most people in the territory adhere to Christianity or Islam. In medieval times much of Eritrea fell under the Medri Bahri kingdom, the creation of modern-day Eritrea is a result of the incorporation of independent, distinct kingdoms and sultanates eventually resulting in the formation of Italian Eritrea. In 1947 Eritrea became part of a federation with Ethiopia, the Federation of Ethiopia, subsequent annexation into Ethiopia led to the Eritrean War of Independence, ending with Eritrean independence following a referendum in April 1993. Hostilities between Eritrea and Ethiopia persisted, leading to the Eritrean–Ethiopian War of 1998–2000 and further skirmishes with both Djibouti and Ethiopia, Eritrea is a one-party state in which national legislative elections have been repeatedly postponed. According to Human Rights Watch, the Eritrean governments human rights record is considered among the worst in the world, the Eritrean government has dismissed these allegations as politically motivated. The compulsory military service requires lengthy, indefinite conscription periods, which some Eritreans leave the country in order to avoid, since all local media is state-owned, Eritrea was also ranked as having the least press freedom in the global Press Freedom Index. Eritrea is a member of the African Union, the United Nations, and IGAD, during the Middle Ages, the Eritrea region was known as Medri Bahri. The name Eritrea is derived from the ancient Greek name for the Red Sea and it was first formally adopted in 1890, with the formation of Italian Eritrea. The territory became the Eritrea Governorate within Italian East Africa in 1936, Eritrea was annexed by Ethiopia in 1953 and an Eritrean Liberation Front formed in 1960. Eritrea gained independence following the 1993 referendum, and the name of the new state was defined as State of Eritrea in the 1997 constitution. At Buya in Eritrea, one of the oldest hominids representing a link between Homo erectus and an archaic Homo sapiens was found by Italian scientists. Dated to over 1 million years old, it is the oldest skeletal find of its kind, during the last interglacial period, the Red Sea coast of Eritrea was occupied by early anatomically modern humans. It is believed that the area was on the out of Africa that some scholars suggest was used by early humans to colonize the rest of the Old World
19.
Income tax in the United States
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In the United States, a tax is imposed on income by the federal government, most state governments, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. In the United States, the payroll tax usually refers to FICA taxes that pay into Social Security and Medicare, while income tax refers to taxes that pay into state. Partnerships are not taxed, but their partners are taxed on their shares of partnership income, residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits, an alternative tax applies at the federal and some state levels. Taxable income is total income less allowable deductions, Individuals may also deduct a personal allowance and certain personal expenses, including home mortgage interest, state taxes, contributions to charity, and some other items. Some deductions are subject to limits, Capital gains are taxable, and capital losses reduce taxable income to the extent of gains. Individuals currently pay a rate of tax on capital gains. Taxpayers generally must self assess income tax by filing tax returns, advance payments of tax are required in the form of withholding tax or estimated tax payments. Taxes are determined separately by each jurisdiction imposing tax, due dates and other administrative procedures vary by jurisdiction. April 15 following the tax year is the last day for individuals to file tax returns for federal and many state, Tax as determined by the taxpayer may be adjusted by the taxing jurisdiction. A tax is imposed on net income in the United States by the federal, most state. Income tax is imposed on individuals, corporations, estates, the definition of net taxable income for most sub-federal jurisdictions mostly follows the federal definition. The rate of tax at the level is graduated, that is. Some states and localities impose a tax at a graduated rate. Federal tax rates in 2013 varied from 10% to 39. 6%, Individuals are eligible for a reduced rate of federal income tax on capital gains and qualifying dividends. The tax rate and some deductions are different for individuals depending on filing status, married individuals may compute tax as a couple or separately. Single individuals may be eligible for reduced tax rates if they are head of a household in which live with a dependent
20.
Forbes
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Forbes is an American business magazine. Published bi-weekly, it features articles on finance, industry, investing. Forbes also reports on related subjects such as technology, communications, science, politics and its headquarters is located in Jersey City, New Jersey. Primary competitors in the business magazine category include Fortune and Bloomberg Businessweek. The magazine is known for its lists and rankings, including its lists of the richest Americans. Another well-known list by the magazine is The Worlds Billionaires list, the motto of Forbes magazine is The Capitalist Tool. Its chairman and editor-in-chief is Steve Forbes, and its CEO is Mike Perlis, Forbes, a financial columnist for the Hearst papers, and his partner Walter Drey, the general manager of the Magazine of Wall Street, founded Forbes magazine on September 15,1917. Forbes provided the money and the name and Drey provided the publishing expertise, the original name of the magazine was Forbes, Devoted to Doers and Doings. Drey became vice-president of the B. C. Forbes Publishing Company, while B. C. Forbes became editor-in-chief, B. C. Forbes was assisted in his later years by his two eldest sons, Bruce Charles Forbes and Malcolm Stevenson Forbes. Bruce Forbes took over on his fathers death, and his strengths lay in streamlining operations, during his tenure, 1954–1964, the magazines circulation nearly doubled. On Malcolms death, his eldest son Malcolm Stevenson Steve Forbes Jr. became President and Chief Executive of Forbes, between 1961 and 1999 the magazine was edited by James Michaels. In 1993, under Michaels, Forbes was a finalist for the National Magazine Award. com, a 2009 New York Times report said,40 percent of the enterprise was sold. For a reported $300 million, setting the value of the enterprise at $750 million, according to Mark M. Edmiston of AdMedia Partners, Its probably not worth half of that now. The companys headquarters moved to the Newport section of downtown Jersey City. In November 2013, Forbes Media, which publishes Forbes magazine, was put up for sale and this was encouraged by Elevation Partners, of whom were minority shareholders. Sales documents prepared by Deutsche Bank revealed that the publishers 2012 EBITDA was $15 million, Forbes reportedly sought a price of $400 million. In July 2014, Forbes sold a majority of itself to Integrated Whale Media Investments, Steve Forbes and his magazines writers offer investment advice on the weekly Fox TV show Forbes on Fox and on Forbes On Radio. Other company groups include Forbes Conference Group, Forbes Investment Advisory Group, from the 2009 Times report, Steve Forbes recently returned from opening up a Forbes magazine in India, bringing the number of foreign editions to 10
21.
Renunciation of citizenship
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Renunciation is the voluntary act of relinquishing ones citizenship or nationality. It is the opposite of naturalization–whereby a person acquires a citizenship. The common law doctrine of perpetual allegiance denied an individual the right to renounce obligations to his sovereign, the bonds of subjecthood were conceived in principle to be both singular and immutable. These practices held on in varying ways until the late 19th century, the refusal of many states to recognize expatriation became problematic for the United States, which had a large immigrant population. The War of 1812 was caused partly by Britains impressment of U. S. citizens born in the UK into the British Royal Navy, immigrants to the U. S. were sometimes held to the obligations of their foreign citizenship when they visited their home countries. In response, the U. S. government passed the Expatriation Act of 1868 and concluded various treaties, renunciation of citizenship is particularly relevant in cases of multiple citizenship, given that additional citizenships may be acquired automatically and may be undesirable. People from some countries renounce their citizenship to avoid military service. However, some people may wish to be even of the purely theoretical obligations. Another example may be political refugees who would wish to renounce allegiance to the country from which they escaped, each country sets its own policies for formal renunciation of citizenship. Some countries may not allow or do not recognize renunciation of citizenship or establish administrative procedures that are impossible to complete. Mexico requires renunciation of all other citizenships as a condition of naturalization, israel allows dual citizenship upon naturalization through the Law of Return, but Knesset members are required to renounce all foreign citizenships. Renunciation of citizenship is most straightforward in those countries which recognize, thus, voluntary naturalization in another country is considered as giving up of ones previous citizenship or implicit renunciation. For practical reasons, such an automatic renunciation cannot officially take place until the authorities of the country are informed about the naturalization. In Japan, a report is required from the renouncing person to be submitted at an embassy. Canada and Australia are signatories to the United Nations Convention on the Reduction of Statelessness, applications for renunciation of citizenship need to be submitted in those countries with a waiting time of several months until approval. Under §29, a person of either gender becomes of age at eighteen years. Senate President David Mark was initially disinclined to permit a second vote on the matter, yerimas arguments were sufficient to convince enough erstwhile supporters and non-voters to oppose the amendment, with a vote of 60–35, it was deprived of its supermajority and failed to pass. Citizens of Singapore can only renounce Singaporean citizenship if they have acquired citizenship of another country, at the time of renunciation, renunciants must submit their Singaporean passports and National Registration Identity Cards for cancellation
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Citizenship of the United States
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Citizenship in the United States is a status that entails specific rights, duties and benefits. State citizenship may affect tax decisions and eligibility for some state-provided benefits such as higher education, in Article One of the Constitution, the power to establish a uniform rule of naturalization is granted explicitly to Congress. A citizen of another country naturalized as a U. S. citizen may retain their previous citizenship, a U. S. citizen retains U. S. citizenship when becoming the citizen of another country, should that countrys laws allow it. Citizenship can be renounced by American citizens who hold another citizenship via a formal procedure at a U. S. Embassy. United States citizens have the right to reside and work in the United States, certain non-citizens, such as permanent residents, have similar rights, however, non-citizens, unlike citizens, may have the right taken away. For example, they may be deported if convicted of a serious crime, freedom to enter and leave the United States. United States citizens have the right to enter and leave the United States freely, certain non-citizens, such as permanent residents, have similar rights. Unlike permanent residents, U. S. citizens do not have an obligation to maintain residence in the U. S. – they can leave for any length of time, voting for federal office in all fifty states and the District of Columbia is restricted to citizens only. States are not required to extend the franchise to all citizens, for example, several states bar citizen felons from voting, even after they have completed any custodial sentence. The United States Constitution bars states from restricting citizens from voting on grounds of race, color, previous condition of servitude, sex, failure to pay any tax, or age. Historically, many states and local jurisdictions have allowed non-citizens to vote, however, citizens are not compelled to vote. Freedom to stand for public office, most states have similar requirements, for example California requires that legislators have been citizens for three years, and the Governor have been a citizen for five years, upon taking office. Constitution requires that one be a natural born Citizen and a U. S. resident for fourteen years in order to be President of the United States, the Constitution also stipulates that otherwise eligible citizens must meet certain age requirements for these offices. Jury duty is imposed upon citizens. Johns Hopkins University political scientist Benjamin Ginsberg writes, The professional military has limited the need for citizen soldiers, in the United States today, everyone except those whose income is derived from tax-exempt revenue is required to file a federal income tax return. American citizens are subject to income tax on worldwide income regardless of their country of residence. Consular protection outside the United States, while traveling abroad, if a person is arrested or detained by foreign authorities, the person can request to speak to somebody from the U. S. Embassy or Consulate. Consular officials can provide resources for Americans incarcerated abroad, such as a list of attorneys who speak English
23.
Taxation in the United States
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The United States of America is a federal republic with separate federal, state, and local government. Taxes are imposed in the United States at each of these levels and these include taxes on income, payroll, property, sales, capital gains, dividends, imports, estates and gifts, as well as various fees. In 2010 taxes collected by federal, state and municipal governments amounted to 24. 8% of GDP, in the OECD, only Chile and Mexico taxed less as a share of GDP. However, taxes fall much more heavily on income than on capital income. Divergent taxes and subsidies for different forms of income and spending can also constitute a form of taxation of some activities over others. For example, individual spending on education can be said to be taxed at a high rate. Taxes are imposed on net income of individuals and corporations by the federal, most state, citizens and residents are taxed on worldwide income and allowed a credit for foreign taxes. Income subject to tax is determined under tax accounting rules, not financial accounting principles, most business expenses reduce taxable income, though limits apply to a few expenses. State rules for determining taxable income often differ from federal rules, Federal tax rates vary from 10% to 39. 6% of taxable income. State and local tax rates vary widely by jurisdiction, from 0% to 13. 30% of income, state taxes are generally treated as a deductible expense for federal tax computation. In 2013, the top income tax rate for a high-income California resident would be 52. 9%. The United States is one of two countries in the world that taxes its non-resident citizens on worldwide income, in the manner and rates as residents. The Supreme Court upheld the constitutionality of the payment of tax in the case of Cook v. Tait,265 U. S.47. Payroll taxes are imposed by the federal and all state governments and these include Social Security and Medicare taxes imposed on both employers and employees, at a combined rate of 15. 3%. Social Security tax applies only to the first $106,800 of wages in 2009 through 2011, however, benefits are only accrued on the first $106,800 of wages. Employers must withhold income taxes on wages, an unemployment tax and certain other levies apply to employers. Payroll taxes have increased as a share of federal revenue since the 1950s. Property taxes are imposed by most local governments and many special purpose authorities based on the market value of property
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Double taxation
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Double taxation is the levying of tax by two or more jurisdictions on the same declared income, asset, or financial transaction. Another approach is for the jurisdictions affected to enter into a tax treaty which sets out rules to double taxation. The term double taxation can also refer to the taxation of some income or activity. The term is not usually used to refer to the taxation of the income by different levels of government, such as by federal, state. It is not unusual for a business or individual who is resident in one country to make a gain in another. This person may find that he is obliged by domestic laws to pay tax on that gain locally, since this is inequitable, many nations make bilateral double taxation agreements with each other. In some cases, this requires that tax be paid in the country of residence, to do this, the taxpayer must declare himself to be non-resident there. So the second aspect of the agreement is that the two taxation authorities exchange information about such declarations, and so may investigate any anomalies that might indicate tax evasion. While individuals, or natural persons can have only one residence at a time, corporate persons, owning foreign subsidiaries, in the European Union, member states have concluded a multilateral agreement on information exchange. This means that they will report a list of those savers who have claimed exemption from local taxation on grounds of not being a resident of the state where the income arises. These savers should have declared that foreign income in their own country of residence, a recent study by BusinessEurope confirms that double taxation remains a problem for European MNEs and an obstacle for cross border trade and investments. In particular, the areas are limitation in interest deductibility, foreign tax credits, permanent establishment issues. Germany and Italy have been identified as the Member States in which most double taxation cases have occurred, cyprus has completed over 45 Double Taxation Treaties up to today and is also in negotiations with many countries for signing Treaties with them. The main purpose of these treaties is the avoidance of taxation on income earned in any of these countries. If a foreign citizen is in Germany for less than a relevant 183-day period and is tax resident elsewhere, the relevant 183 day period is either 183 days in a calendar year or in any period of 12 months, depending upon the particular treaty involved. India has comprehensive DTAAs with 88 countries, out of which 85 have entered into force and this means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation, thus, India gives relief to both kinds of taxpayers. A large number of institutional investors who trade on the Indian stock markets operate from Singapore
25.
Juristic person
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To have legal personality means to be capable of holding legal rights and obligations within a certain legal system, such as entering into contracts, suing, and being sued. Legal personality is a prerequisite to legal capacity, the ability of any person to amend rights. In international law, consequently, legal personality is a prerequisite for an organization to be able to sign international treaties in its own name. A holder of legal personality is called as a person, Persons are of two kinds, natural persons and juridical persons – entities such as corporations, which are treated in law as if they are persons. While human beings acquire legal personhood when they are born, juridical persons do so when they are incorporated in accordance with law, artificial personality, juridical personality, or juristic personality is the characteristic of a non-living entity regarded by law to have the status of personhood. A juridical or artificial person has a name and has certain rights, protections, privileges, responsibilities. The concept of a person is a fundamental legal fiction. It is pertinent to the philosophy of law, as it is essential to laws affecting a corporation, juridical personality allows one or more natural persons to act as a single entity for legal purposes. In many jurisdictions, artificial personality allows that entity to be considered under law separately from its individual members and they may sue and be sued, enter contracts, incur debt, and own property. Entities with legal personality may also be subjected to legal obligations. An entity with legal personality may shield its members from personal liability, in some common law jurisdictions a distinction is drawn between corporation aggregate and a corporation sole. Historically most corporations sole were ecclesiastical in nature, but a number of public offices are now formed as corporations sole. The concept of personality is not absolute. The concept of a person is now central to Western law in both common-law and civil-law countries, but it is also found in virtually every legal system. Examples are a religious officiant in that capacity, or The Crown in the Commonwealth realms, a corporation aggregate is a corporation constituted by more than one member. Municipal corporations are creatures of statute, other organizations may be created by statute as legal persons, including European economic interest groupings. Unincorporated associations, that is aggregates of two or more persons, are treated as persons in some jurisdictions but not others. Partnerships, an aggregate of two or more persons to carry on a business in common for profit and created by agreement, traditionally, partnerships did not have continuing legal personality, but many jurisdictions now treat them as having an independent legal personality
26.
Business
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A business is an organizational entity involved in the provision of goods and services to consumers. Businesses may also be social non-profit enterprises or state-owned public enterprises operated by governments with specific social, a business owned by multiple private individuals may form as an incorporated company or jointly organise as a partnership. Countries have different laws that may ascribe different rights to the business entities. The word business can refer to an organization or to an entire market sector or to the sum of all economic activity. Compound forms such as agribusiness represent subsets of the broader meaning. Businesses aim to maximize sales to have their income exceed their expenditures, resulting in a profit, the owner operates the business alone and may hire employees. A sole proprietor has unlimited liability for all obligations incurred by the business, partnership, A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business, the three most prevalent types of for-profit partnerships are, general partnerships, limited partnerships, and limited liability partnerships. Corporation, The owners of a corporation have limited liability and the business has a legal personality from its owners. Corporations can be either government-owned or privately owned and they can organize either for profit or as nonprofit organizations. A privately owned, for-profit corporation is owned by its shareholders, a privately owned, for-profit corporation can be either privately held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange. Cooperative, Often referred to as a co-op, a cooperative is a limited-liability business that can organize as for-profit or not-for-profit, a cooperative differs from a corporation in that it has members, not shareholders, and they share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives, cooperatives are fundamental to the ideology of economic democracy. In contrast, unincorporated businesses or persons working on their own are not as protected. Franchises, A franchise is a system in which entrepreneurs purchase the rights to open, franchising in the United States is widespread and is a major economic powerhouse. One out of retail businesses in the United States are franchised and 8 million people are employed in a franchised business. Real estate businesses sell, invest, construct and develop properties – including land, residential homes, retailers, wholesalers, and distributors act as middlemen and get goods produced by manufacturers to the intended consumers, they make their profits by marking up their prices. Most stores and catalog companies are distributors or retailers, transportation businesses such as railways, airlines, shipping companies that deliver goods and individuals to their destinations for a fee
27.
Foundation (nonprofit)
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A foundation is a legal category of nonprofit organization that will typically either donate funds and support to other organizations, or provide the source of funding for its own charitable purposes. Foundations incorporate private foundations and public foundations and this type of non-profit organization differs from a private foundation which is typically endowed by an individual or family. One of the characteristics of the legal entities existing under the status of Foundations, is a diversity of structures and purposes. Nevertheless, there are common structural elements that are the first observed under legal scrutiny or classification. Others may be provided by the authority at each particular jurisdiction. There is no commonly accepted legal definition in Europe for a foundation, there is a proposal for a European Foundation, a legal form that would be recognised throughout Europe, see European Foundation Project. The term foundation, in general, is used to describe a legal entity. Foundations as legal structures and/or legal persons, may have a diversity of forms, unlike a company, foundations have no shareholders, though they may have a board, an assembly and voting members. The foundation has a distinct patrimony independent of its founder, Foundations are often set up for charitable purposes, family patrimony and collective purposes. Foundations in Finland must have state approval and register at the National Board of Patents, a minimum capital of €25,000 is obligatory. A foundation can be created with any purpose and may have economic activity if this is specified in its Bylaws. There are not many Foundations in comparison to the rest of Europe, in practice public administration requires at least €1 million is considered necessary. States representatives have a seat in the Board. German regulations allow the creation of any foundation for public or private purposes in keeping with the concept of a gemeinwohlkonforme Allzweckstiftung, a foundation should not have commercial activities as its main purpose, but they are permitted if they serve the main purpose of the foundation. There is no minimum starting capital, although in practice at least is considered necessary, a German foundation can either be charitable or serve a private interest. If they engage in activities, only the commercially active part of the entity is taxed. A family foundation serving private interests is taxed like any other legal entity, there is no central register for German foundations. Only charitable foundations are subject to supervision by state authorities, family foundations are not supervised after establishment
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Private foundation
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A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy or an object legal in the economic operation. The Bill & Melinda Gates Foundation is the largest private foundation in the U. S. with over $38 billion in assets, however, most private foundations are much smaller. Approximately two-thirds of the more than 84,000 foundations which file with the IRS, in 2008, have less than $1 million in assets, and 93% have less than $10 million in assets. In aggregate, private foundations in the U. S. control over $628 billion in assets, unlike a charitable foundation, a private foundation does not generally solicit funds from the public. And a private foundation does not have the requirements and reporting responsibilities of a registered. Not all foundations engage in philanthropy, some private foundations are used for planning purposes. One of the characteristics of the legal entities existing under the status of Foundations is a diversity of structures and purposes. Nevertheless, there are common structural elements that are the first observed under legal scrutiny or classification. Others may be provided by the authority at each particular jurisdiction. The following foundations are set up under common law legal systems, a private foundation, in the United States, is a charitable organization described in the Internal Revenue Code by section 509. A private foundation is necessarily a 501 exempt organization and it is defined by a negative definition, by what it is not. A private foundation is not a charity, as described in section 170 through. Neither is it a section 509 organization, nor a supporting organization, Private foundations are subject to 2% excise taxes found in section 4940 through 4945 of the internal revenue code. Once a charity becomes a foundation, it retains that status unless it follows the difficult termination rules of section 507. The following foundations are set up under civil law legal systems, in Canada the Canada Revenue Agency is a branch of the Canadian government which regulates all foundations. Under Canadian law, since 1967, a foundation is controlled by a single donor or family through a board that is made up of a majority of directors at non-arm’s length. It is a registered charity with the Canada Revenue Agency. A public foundation is governed by a board that is made up of a majority of directors at arm’s length, a private foundation is not allowed to engage in any business activity, but it can operate its own charitable program
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Capital gains tax
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A capital gains tax is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metals, not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations. For equities, an example of a popular and liquid asset, national, taxes are charged by the state over the transactions, dividends and capital gains on the stock market. However, these fiscal obligations may vary from jurisdiction to jurisdiction, there is no specific capital gains tax in Argentina, however, there is a 9% to 35% tax for fiscal residents on their world revenues, including capital gains. Australia collects capital gains tax only upon realized capital gains, except for certain provisions relating to deferred-interest debt such as zero-coupon bonds, the tax is not separate in its own right, but forms part of the income-tax system. The proceeds of an asset sold less its cost base are the capital gain, discounts and other concessions apply to certain taxpayers in varying circumstances. The amount left after applying the discount is added to the income of the taxpayer for that financial year. For individuals, the most significant exemption is the family home, Capital gains or losses as a general rule can be disregarded for CGT purposes when assets were acquired before 20 September 1985. Austria taxes capital gains at 25% or 27. 5%, there is an exception for capital gains from the sale of shares of foreign entities if the participation exceeds 10% and shares are held for over one year. There is no capital gains tax charged in Barbados, for purposes of the participation exemption for capital gains the minimum participation test is not required. Unrealised capital gains on shares that are recognised in the statements are taxable. But a roll-over relief is granted if, and as long as, as a counterpart to the new exemption of realised capital gains, capital losses on shares, both realised and unrealised, are no longer tax deductible. However, the loss incurred in connection with the liquidation of a subsidiary company remains deductible up to the amount of the share capital. Other capital gains are taxed at the ordinary rate, if the total amount of sales is used for the purchase of depreciable fixed assets within 3 years, the taxation of the capital gains will be spread over the depreciable period of these assets. There are no capital gains taxes for residents or non-residents in Belize, Capital gain taxes are only paid on realized gains. At the current stage, taxes are 15% for transactions longer than one day old and 20% for day trading, dividends are tax free, since the issuer company has already paid to RECEITA FEDERAL. Derivatives follow the rules for tax purposes as company stocks. When selling less than R$20.000 within a month, the operation is considered tax-free
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Income tax
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An income tax is a tax imposed on individuals or entities that varies with the income or profits of the taxpayer. Many jurisdictions refer to income tax on business entities as companies tax or corporate tax, partnerships generally are not taxed, rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions, most jurisdictions exempt locally organized charitable organizations from tax. Income tax generally is computed as the product of a tax rate times taxable income, the tax rate may increase as taxable income increases. Taxation rates may vary by type or characteristics of the taxpayer, capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax, some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. Taxable income of resident in the jurisdiction is generally total income less income producing expenses. Generally, only net gain from sale of property, including goods held for sale, is included in income, Income of a corporations shareholders usually includes distributions of profits from the corporation. Deductions typically include all income producing or business expenses including an allowance for recovery of costs of business assets, many jurisdictions allow notional deductions for individuals, and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income, nonresidents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions. Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments, advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are generally subject to significant penalties, for most of the history of civilization, these preconditions did not exist, and taxes were based on other factors. Taxes on wealth, social position, and ownership of the means of production were all common, the first income tax is generally attributed to Egypt. In the early days of the Roman Republic, public taxes consisted of modest assessments on owned wealth, the tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war. These modest taxes were levied against land, homes and other estate, slaves, animals, personal items. The more a person had in property, the tax they paid. In the year 10 AD, Emperor Wang Mang of the Xin Dynasty instituted an unprecedented income tax, at the rate of 10 percent of profits, for professionals and skilled labor. He was overthrown 13 years later in 23 AD and earlier policies were restored during the reestablished Han Dynasty which followed, one of the first recorded taxes on income was the Saladin tithe introduced by Henry II in 1188 to raise money for the Third Crusade
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Salary
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A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, in accounting, salaries are recorded in payroll accounts. Salary is an amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of one-twelfth of the annual salary, salary is typically determined by comparing market pay rates for people performing similar work in similar industries in the same region. Salary is also determined by leveling the pay rates and salary ranges established by an individual employer, salary is also affected by the number of people available to perform the specific job in the employers employment locale. From this, most infer that the first salary would have paid in a village or city during the Neolithic Revolution. A cuneiform inscribed clay tablet dated about 3100 BCE provides a record of the daily rations for workers in Mesopotamia. The beer is represented by an upright jar with a pointed base, the symbol for rations is a human head eating from a bowl. Round and semicircular impressions represent the measurements, by the time of the Hebrew Book of Ezra, salt from a person was synonymous with drawing sustenance, taking pay, or being in that persons service. At that time, salt production was controlled by the monarchy or ruling elite. The Latin word salarium linked employment and salt, but the link is not very clear. But there is no evidence for this assertion at all, such roles were largely remunerated by the provision of lodging, food, and livery clothes. Many courtiers, such as valets de chambre, in medieval courts were paid annual amounts. In corporations of this time, such as the several East India Companies, from 1870 to 1930, the Second Industrial Revolution gave rise to the modern business corporation powered by railroads, electricity and the telegraph and telephone. This era saw the emergence of a class of salaried executives and administrators who served the new. Today, the concept of a salary continues to evolve as part of a system of the compensation that employers offer to employees. Compensation has evolved gradually moving away from fixed short-term immediate compensation towards fixed + variable outcomes-based compensation, an increase in knowledge-based work has also led to pursuit of partner like engagement. In Botswana, salaries are almost entirely paid on a basis with pay dates falling on different dates of the second half of the month
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Dividend
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A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, a dividend is allocated as a fixed amount per share, with shareholders receiving a dividend in proportion to their shareholding. For the joint-stock company, paying dividends is not an expense, rather, retained earnings are shown in the shareholders equity section on the companys balance sheet – the same as its issued share capital. Public companies usually pay dividends on a schedule, but may declare a dividend at any time. Cooperatives, on the hand, allocate dividends according to members activity. The word dividend comes from the Latin word dividendum, Cash dividends are the most common form of payment and are paid out in currency, usually via electronic funds transfer or a printed paper check. Such dividends are a form of investment income and are taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the company, for each share owned, a declared amount of money is distributed. Thus, if a person owns 100 shares and the dividend is 50 cents per share. Dividends paid are not classified as an expense, but rather a deduction of retained earnings, Dividends paid does not show up on an income statement but does appear on the balance sheet. Stock or scrip dividends are paid out in the form of additional stock shares of the issuing corporation. They are usually issued in proportion to shares owned, Stock dividend distributions are issues of new shares made to limited partners by a partnership in the form of additional shares. Nothing is split, these increase the market capitalization and total value of the company at the same time reducing the original cost basis per share. Stock dividends are not includable in the income of the shareholder for US income tax purposes. Because the shares are issued for proceeds equal to the market price of the shares. Property dividends or dividends in specie are those out in the form of assets from the issuing corporation or another corporation. They are relatively rare and most frequently are securities of companies owned by the issuer, however they can take other forms, such as products
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Trustee
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Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another. A trustee can also refer to a person who is allowed to do certain tasks, in all cases, the trustee may be a person or company, whether or not they are a prospective beneficiary. However, a trustee may act otherwise than in accordance with the terms of the trust if all beneficiaries, being sui juris and together absolutely entitled, direct the trustee to do so. If any question arises as to the constriction of the provisions of the trust, account for actions and keep beneficiaries informed, these include a duty to inform beneficiaries as to their entitlements under the trust and other matters concerning the trust. As trustees as not under a duty to disclose their reasoning in applying a trust power, protection of confidentiality has been described as one of the most important limitations on the right to disclose of trust documents. Memoranda or letter of wishes do not necessarily need to be disclosed to a beneficiary if they are of a number of potential beneficiaries, corporate trustees, typically trust departments at large banks, often have very narrow duties, limited to those the trust indenture explicitly defines. A trustee carries the responsibility and liability to use the trust assets according to the provisions of the trust instrument. The trustee may find himself liable to claimants, prospective beneficiaries and it is common for lawyers to draft will trusts so as to permit such payment, and to take office accordingly, this may be an unnecessary expense for small estates. In an exception to the duties outlined above, sabbatical officers of unions who are also trustees of these organisations they work for do have the right to a salary. This is an exception explicitly granted in the 1993 act The broadest sense of the term applies to someone held to a fiduciary duty similar in some respects to that of a trustee proper. For example, the directors of a bank may be trustees for the depositors, directors of a corporation are trustees for the stockholders, many corporations call their governing board a board of trustees, though in those cases they act as a board of directors. Many UK charities are also limited liability companies registered with Companies House, in case the trustees are also directors of the company. This is the model if the charity owns property or employs people. The law on this in England changed considerably with the Charities Act of 2006, an account of the main changes can be found in Charities Act 2006 A guide to the new law by Michael King and Ann Phillips. One of the key changes made was that it introduced the Charitable Incorporated Organisation which is basically a limited liability charity, there are thus now two main aspects of corporate management of charities. One is the way in which a corporation is a corporate trustee of a given charity. The second is the new way, in which the charity itself is incorporated as a CIO, the advantages and disadvantages of the different methods is a complicated matter. According to King and Philips, many of the advantages of incorporating as a CIO are obtained if the trustees are not individuals but a corporate entity
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United States Department of Justice
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The department was formed in 1870 during the Ulysses S. Grant administration. In its early years, the DOJ vigorously prosecuted Ku Klux Klan members, the Department of Justice administers several federal law enforcement agencies including the Federal Bureau of Investigation and the Drug Enforcement Administration. The department has responsibility to investigate instances of fraud, to represent the United States in legal matters such as in the Supreme Court. The department also has responsibilities to review actions of law enforcement conduct by the Violent Crime Control. The Department is headed by the United States Attorney General, who is nominated by the President, the current Attorney General is Jeff Sessions. The U. S. Attorney General was initially a one-person and it was established by the Judiciary Act of 1789, but this grew with the bureaucracy. At one time the Attorney General gave legal advice to the U. S. Congress as well as the President, until March 3,1853, the salary of the Attorney General was set by statute at less than the amount paid to other Cabinet members. Early Attorneys General supplemented their salary by engaging in private practice of law. Following unsuccessful efforts to put the Attorney Generals Office on a footing, in 1869. On February 19,1868, Lawrence introduced a bill in Congress to create the Department of Justice, President Ulysses S. Grant then signed the bill into law on June 22,1870. The Department of Justice officially began operations on July 1,1870, just prior to the Civil War, in February 1861, the Confederate States of America established a Department of Justice. Grant appointed Amos T. Akerman as Attorney General and Benjamin H. Bristow as Americas first Solicitor General, both Akerman and Bristow used the Department of Justice to vigorously prosecute Ku Klux Klan members in the early 1870s. In the first few years of Grants first term in there were 1000 indictments against Klan members with over 550 convictions from the Department of Justice. The result was a decrease in violence in the South. Akerman gave credit to Grant and told a friend that no one was better or stronger then Grant when it came to prosecuting terrorists. Akermans successor, George H. Williams, in December 1871, the law did create a new office, that of Solicitor General, to supervise and conduct government litigation in the Supreme Court of the United States. In 1884, control of federal prisons was transferred to the new department, new facilities were built, including the penitentiary at Leavenworth in 1895, and a facility for women located in West Virginia, at Alderson was established in 1924. The U. S. Department of Justice building was completed in 1935 from a design by Milton Bennett Medary, upon Medarys death in 1929, the other partners of his Philadelphia firm Zantzinger, Borie and Medary took over the project
35.
Tax Reform Act of 1986
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The U. S. Congress passed the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters. The top tax rate for individuals was lowered from 50% to 28% while the rate was raised from 11% to 15%. Many lower level tax brackets were consolidated, and the income level of the bottom rate was increased from $5, 720/year to $29. This package ultimately consolidated tax brackets from fifteen levels of income to four levels of income, the higher standard deduction substantially simplified the preparation of tax returns for many individuals. The rate structure also maintained a novel bubble rate, the rates were not 15%/28%, as widely reported. As a result, for taxpayers after a certain income level and this was jettisoned in the Omnibus Budget Reconciliation Act of 1990, otherwise known as the Bush tax increase, which violated his Taxpayer Protection Pledge. The Act also increased incentives favoring investment in owner-occupied housing relative to rental housing by increasing the Home Mortgage Interest Deduction, the Low-Income Housing Tax Credit was added to the Act to provide some balance and encourage investment in multifamily housing for the poor. Moreover, interest on consumer loans such as credit card debt was no longer deductible, an existing provision in the tax code, called Income Averaging, which reduced taxes for those only recently making a much higher salary than before, was eliminated. The Act, however, increased the exemption and standard deduction. The Individual Retirement Account deduction was severely restricted, the IRA had been created as part of the Employee Retirement Income Security Act of 1974, where employees not covered by a pension plan could contribute the lesser of $1500 or 15% of earned income. The Economic Recovery Tax Act of 1981 removed the pension plan clause, the 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes. Prior to ERTA, depreciation was based on useful life calculations provided by the Treasury Department, ERTA set up the accelerated cost recovery system, or ACRS. This set up a series of lives based on 3 years for technical equipment,5 years for non-technical office equipment,10 years for industrial equipment. TRA86 lengthened these lives, and lengthened them further for taxpayers covered by the minimum tax. These latter, longer lives approximate economic depreciation, a concept economists have used to determine the life of an asset relative to its economic value. Defined contribution pension contributions were curtailed, the law prior to TRA86 was that DC pension limits were the lesser of 25% of compensation or $30,000. This could be accomplished by any combination of elective deferrals and profit sharing contributions, TRA86 introduced an elective deferral limit of $7000, indexed to inflation. Since the profit sharing percentage must be uniform for all employees, the Act required people claiming children as dependents on their tax returns to obtain and list a Social Security number for every claimed child, to verify the childs existence
36.
Transfer pricing
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In taxation and accounting, transfer pricing refers to the rules and methods for pricing transactions between enterprises under common ownership or control. The OECD’s 2015 final BEPS reports called for reporting and stricter rules for transfers of risk and intangibles. “Because they often both involve mispricing, many aggressive tax avoidance schemes by multinational corporations can easily be confused with trade misinvoicing, over sixty governments have adopted transfer pricing rules, which in almost all cases are based on the arms-length principle. The rules of all countries permit related parties to set prices in any manner. Most, if not all, governments permit adjustments by the tax authority even where there is no intent to avoid or evade tax, such adjustments generally are made after filing of tax returns. For example, if Bigco US charges Bigco Germany for a machine, following an adjustment, the taxpayer generally is allowed to make payments to reflect the adjusted prices. Most systems allow use of transfer pricing multiple methods, where such methods are appropriate and are supported by reliable data, among the commonly used methods are comparable uncontrolled prices, cost-plus, resale price or markup, and profitability based methods. Many systems differentiate methods of testing goods from those for services or use of property due to inherent differences in aspects of such broad types of transactions. Many such authorizations, including those of the United States, United Kingdom, Canada, in addition, most systems recognize that an arms length price may not be a particular price point but rather a range of prices. Some systems provide measures for evaluating whether a price within such range is considered arms length, significant deviation among points in the range may indicate lack of reliability of data. Reliability is generally considered to be improved by use of multiple year data, most rules require that the tax authorities consider actual transactions between parties, and permit adjustment only to actual transactions. Multiple transactions may be aggregated or tested separately, and testing may use multiple year data, in addition, transactions whose economic substance differs materially from their form may be recharacterized under the laws of many systems to follow the economic substance. Transfer pricing adjustments have been a feature of tax systems since the 1930s. The United States led the development of detailed, comprehensive transfer pricing guidelines with a White Paper in 1988 and proposals in 1990-1992, in 1995, the OECD issued its transfer pricing guidelines which it expanded in 1996 and 2010. The two sets of guidelines are similar and contain certain principles followed by many countries. The OECD guidelines have been adopted by many European Union countries with little or no modification. Most rules provide standards for when unrelated party prices, transactions, such standards typically require that data used in comparisons be reliable and that the means used to compare produce a reliable result. Where such reliable adjustments cannot be made, the reliability of the comparison is in doubt, comparability of tested prices with uncontrolled prices is generally considered enhanced by use of multiple data
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Capital flight
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Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence. This leads to decreases in the purchasing power of the countrys assets and makes it increasingly expensive to import goods and acquire any form of foreign facilities. Capital flight may be legal or illegal under domestic law and it is indicated as missing money from a nations balance of payments. Capital flight is also used to refer to the removal of wealth. Post-apartheid South African cities are probably the most visible example of this phenomenon, the flight of capital from central cities to the suburbs that ring them was also common throughout the second half of the twentieth century in the United States. Countries with resource-based economies experience the largest capital flight, a classical view on capital flight is that it is currency speculation that drives significant cross-border movements of private funds, enough to affect financial markets. The presence of capital flight indicates the need for policy reform, in 1995, the International Monetary Fund estimated that capital flight amounted to roughly half of the outstanding foreign debt of the most heavily indebted countries of the world. Capital flight was seen in some Asian and Latin American markets in the 1990s, the Argentine economic crisis of 2001 was in part the result of massive capital flight, induced by fears that Argentina would default on its external debt. This was also seen in Venezuela in the early 1980s with one years total export income leaving through illegal capital flight. In the last quarter of the 20th century, capital flight was observed from countries that offer low or negative real interest rate to countries that offer real interest rate. A2006 article in The Washington Post gave several examples of private capital leaving France in response to the wealth tax. A2008 paper published by Global Financial Integrity estimated capital flight and this corresponds to a figure of £2bn in the equivalent six months in the preceding year. Global Financial Integrity, Studies and works to curtail illicit capital flight from developing countries
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African Union
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The African Union is a continental union consisting of all 55 countries on the African continent. It was established on 26 May 2001 in Addis Ababa, Ethiopia, the most important decisions of the AU are made by the Assembly of the African Union, a semi-annual meeting of the heads of state and government of its member states. The AUs secretariat, the African Union Commission, is based in Addis Ababa, the objectives of the AU are, To achieve greater unity and solidarity between the African countries and Africans. To defend the sovereignty, territorial integrity and independence of its Member States, to accelerate the political and social-economic integration of the continent. To promote and defend African common positions on issues of interest to the continent, to encourage international cooperation, taking due account of the Charter of the United Nations and the Universal Declaration of Human Rights. To promote peace, security, and stability on the continent, to promote democratic principles and institutions, popular participation and good governance. To promote and protect human and peoples rights in accordance with the African Charter on Human and Peoples Rights, to establish the necessary conditions which enable the continent to play its rightful role in the global economy and in international negotiations. To promote sustainable development at the economic, social and cultural levels as well as the integration of African economies, to promote co-operation in all fields of human activity to raise the living standards of African peoples. To coordinate and harmonize the policies between the existing and future Regional Economic Communities for the attainment of the objectives of the Union. To advance the development of the continent by promoting research in all fields, in particular in science, to work with relevant international partners in the eradication of preventable diseases and the promotion of good health on the continent. The African Union is made up of political and administrative bodies. The highest decision-making organ is the Assembly of the African Union, the Assembly is chaired by Idriss Déby, President of Chad. The AU also has a body, the Pan African Parliament. Its president is Bethel Nnaemeka Amadi, the AU Commission, the secretariat to the political structures, is chaired by Nkosazana Dlamini-Zuma of South Africa. On 15 July 2012, Ms. Dlamini-Zuma won a contested vote to become the first female head of the African Union Commission. The main administrative capital of the African Union is in Addis Ababa, Ethiopia, a new headquarters complex, the AU Conference Center and Office Complex, was inaugurated on 28 January 2012, during the 18th AU summit. The tower is 99.9 meters high to signify the date 9 September 1999, the AU covers the entire continent except for several territories held by Spain, France, Portugal and the United Kingdom. AU troops were deployed in Sudan for peacekeeping during Darfur conflict
