The European Union Cracks Down on Member State Corporate Tax Agreements

Corina McIntyre, Vol. 37 Associate Editor

On October 21, 2015, the European Commission ruled that Luxembourg and the Netherlands granted illegal tax agreements to Fiat Finance and Trade and Starbucks.  In essence, the European Commission determined that these tax agreements created anticompetitive effects by granting these multinational corporations unfair tax advantages.  Continue reading

Common Reporting Standard (CRS): Development and Limitations

Sihang Zhang, Vol. 37 Associate Editor

In recent years, the ease of establishing accounts at foreign financial institutions, combined with financial advisors who routinely establish foreign structures to hide income, create a unique risk of tax evasion for governmental authority, especially in a self-assessed tax system, where taxpayers may choose not to comply with their domestic tax reporting obligations. Indeed, the increasingly globalized and borderless world of finance makes it a lot more “tempting” for wealthy people to hide their money abroad. Against the backdrop of rising public anger about tax avoidance and evasion, the G20 finance ministers endorsed automatic exchange as the new tax transparency standard on April 19, 2013.[i] Two years later, on October 29, 2014, 51 jurisdictions (39 were represented at ministerial level), signed a multilateral competent authority agreement to automatically exchange information based on Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.[ii] More than 65 jurisdictions publicly committed to implementation. Continue reading

Do International Trade and Human Rights Law Allow “Fat Taxes”?

Alicia McCaffrey, Vol. 37 Associate Editor

Many in the U.S. remember the controversy that ensued when Mayor Michael Bloomberg attempted to enact a ban on the sale of large containers of soda in New York City.[1] While the national response was rather negative (and in fact a New York state judge later overruled the regulation[2]), the proposed ban would not have been unusual in the international context. Several countries, most of which are European, have enacted similar regulations with varying degrees of success.[3] This article examines whether these kinds of “Fat Taxes” are in accordance with international law. Continue reading

FATCA, GATCA and the Controversial Withholding Provision

Abigail Zeitlin, Vol. 36 Associate Editor

For many years, there have been large discrepancies between different countries’ tax reporting standards.  This has allowed for certain countries, like the United Kingdom or Switzerland,[i] to become tax shelters and for other governments to lose out on millions of dollars in tax revenue. [ii] In the United States alone, it was estimated that the government lost out on $100 billion of tax revenue a year due to tax havens.[iii] This phenomenon led to the enactment of the Foreign Account Tax Compliance Act, or FATCA, in 2010.[iv]  One major provision of FATCA requires foreign financial institutions to disclose the names of U.S. citizen account holders and their various transactions, with limited exceptions.[v]   If the institution does not report under FATCA, the U.S. will impose a 30% withholding tax on all transactions involving U.S. money and securities.[vi]   Although FATCA was enacted in 2010, because of the immense amount of bureaucratic muscle necessary to enforce FATCA, it is set to begin being enforced in 2016.[vii] Continue reading