Volume 6, Issue 5, September 2018, Page: 117-126
Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation
Hsiu-li Wu, Taxation and Accounting Group, College of Business, Feng Chia University, Taichung, Taiwan
Shang-Yung Yen, Graduate Institute of Management of Technology, Feng Chia University, Taichung, Taiwan
Received: Oct. 21, 2018;       Accepted: Nov. 6, 2018;       Published: Nov. 30, 2018
DOI: 10.11648/j.jfa.20180605.13      View  20      Downloads  18
Abstract
Multinational corporations have contributed to the unfair phenomenon of tax base erosion and profit shifting by taxation planning and transferring profits into countries or territories with low tax rates. The OECD, under the push from G20 member countries, launched 15 action plans for BEPS (Base Erosion and Profit Shifting), as an attempt to drive reforms in tax systems across different countries for a just and efficient taxation system. As part of this global initiative, the Taiwanese government is also amending its tax laws for better consistency, substance, transparency and fairness. This paper examines Google, Amazon and Starbucks headquartered in the U.S. and Feng Tay headquartered in Taiwan and analyzes how multinational corporations leverage the difference in tax rates in different countries and the existence of bilateral tax agreements for tax planning and profit shifting. The European Commission holds the view that such practices violate the laws of the European Union. This paper conducts an in-depth analysis on the arguments from both sides and develops suggestions on the basis of tax fairness, moral issues and research findings. It is hoped that taxations and profits travel in a just and efficient environment so that taxation fairness benefits economic developments and effective use of resources.
Keywords
Transfer Pricing, Intangible Assets, Base Erosion and Profit Shifting
To cite this article
Hsiu-li Wu, Shang-Yung Yen, Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation, Journal of Finance and Accounting. Vol. 6, No. 5, 2018, pp. 117-126. doi: 10.11648/j.jfa.20180605.13
Copyright
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Reference
[1]
Apple Statement (2017). The facts about Apple’s tax payments.
[2]
Brock, G. and Pogge, T. (2014). Global Tax Justice and Global Justice MOPP, 1–15.
[3]
China Times (2016). Feng Tay Investigated by Chinese Government for Back Taxes. Deloitte Monthly, January, 2017, 52-53.
[4]
Chou, C. P., Lin, C. J., Tsai, H. C., and Chen, I. F., (2015). Most Recent Developments on BEPS – Assessment of Risks and Intangible Assets. Accounting Research Monthly, (357).
[5]
Deloitte Dbriefs Special (2015), OECD Transfer Pricing Guidelines: Nearing the Finish Line.
[6]
Deloitte Monthly (2017), July 2017, 9-10, 15-17, 25.
[7]
Deloitte & Touche (2016). Special Issue in August, An Analysis on Counter Measures for Tax Avoidance and New Perspectives of Tax Management in the Post-BEPS Era).
[8]
Dietsch, P. and Rixen, T. (2014). Redistribution, Globalisation, and Multi-Level Governance, 1-28.
[9]
Executive Yuan Gazette (2017). Fiscal Policy and Economy: the draft for the Regulations for Tax Information Exchange under Tax Treaties, 023 (171).
[10]
Ernst & Young Global Limited (2017). Special Issue: BEPS and International Trends in Taxation. Fair Competition? Tax Fairness? What is the European Union after? See http://losimprevisibles.blogspot.com/2016/09/blog-post_20.html, last visit at 20 September 2018.
[11]
Heady, C. (1993). Optimal Taxation as a Guide to Tax Policy: A Survey Fiscal Studies,15-41.
[12]
Hou, H. C. (2017). OECD and Korea Policy Center, Seminar on Minimum BEPS Standards.
[13]
Jeremy Kahn and Martijn Van Der Starre (2016). Bloomberg.
[14]
Kuo, Y. P. and Li, C. W. (2016). Impact of Global Taxation Information Exchange on Financial Institutions in Taiwan. Deloitte & Touche.
[15]
KPMG (2016). BEPS and International Trends in Taxation.
[16]
Liao, L. L. and Fan, H. C. (2013). In the Wake of BEPS Actions – Transfer Pricing Documentation and Memorandum for Country-by-Country Reporting. Accounting Research Monthly (337).
[17]
Liu, T. T. (2008). International Tax Planning, Great Books.
[18]
Meeting of the OECD Council at Ministerial Level Paris (2014).
[19]
Ministry of Finance (2015), Amendment to the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's-Length Transfer Pricing, Ministry of Finance’s official website.
[20]
Musgrave, R. A. (1959). Principles of Finance. PwC, 2017, BEPS and International Trends in Taxation.
[21]
OECD Country-by-Country Reporting (2017). Handbook on Effective Tax Risk Assessment.
[22]
OECD Transfer Pricing Report (2015). News Archive.
[23]
OECD (2017). Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
[24]
PwC (2017). The release by the Ministry of Finance of the draft for the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions.
[25]
Sing Tao Daily (2017). European Union Demands $300 Million in Back Taxes from Amazon.
[26]
Smith, A. (1902). The Wealth of Nations, Scotland, W. Strahan and T. Cadell, London, Nanyang College 1902 Chinese, Canons of Taxation.
[27]
Tax theory. See http://www.twword.com/wiki/optimal, last visit at 20 September 2018.
[28]
Tax incidence. See http://wiki.mbalib.com/zh-, last visit at 20 September 2018.
[29]
Technews (2016). Tax Avoidance Planning by Google.
[30]
The Ministry of Finance’s eTax Portal, Income Tax Law, Alternative Minimum Tax, the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions. See https://www.etax.nat.gov.tw, last visit at 20 September 2018.
[31]
Tsilly, D. (2017). International Tax and Global Justice, T Dagan - Theoretical Inquiries in Law, 2017 - degruyter.com, 1-36.
[32]
Wang, L. M. (2015). Tax Agreements and Relevant Issues, Joint Seminar on BESP by OECD and Inland Revenue Board of Malaysia.
[33]
Wang, Y. K. (2017). The Economic Analyses of Tax Evasion Based on the Browning and A-S Models. Asia-Pacific Economic and Management Review, 20(2), 53-72.
[34]
Yang, S. C. (2016). Anti-Tax-Avoidance Clauses in Taiwan — Income Tax Act §43-3 (CFC) and §43- 4(PEM), Impacts and Responses (I).
[35]
Yang, S. C. (2016). Anti-Tax-Avoidance Clauses in Taiwan — Income Tax Act §43-3 (CFC) and §43- 4(PEM), Impacts and Responses (II).
[36]
Yu, I. T. (2017) Taipei Economic Inquiry, (17), Adjustment of Taxation Policies in Taiwan in the Context of the OECD’s Anti-BEPS Guidelines.
[37]
Yue, S. (2008). Public Finance and Taxation, Tsinghua University Press.
Browse journals by subject