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Ekonomia i Prawo. Economics and Law

RESTRAINING HARMFUL TAX COMPETITION: AN ANALYSIS OF AMERICAN CFC LEGISLATION
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  • RESTRAINING HARMFUL TAX COMPETITION: AN ANALYSIS OF AMERICAN CFC LEGISLATION
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RESTRAINING HARMFUL TAX COMPETITION: AN ANALYSIS OF AMERICAN CFC LEGISLATION

Authors

  • Małgorzata Magdalena Hybka Poznań University of Economics

DOI:

https://doi.org/10.12775/EiP.2014.027

Keywords

harmful tax competition, tax avoidance, controlled foreign corporation, USA

Abstract

        Capital and labor mobility facilitates cross-border activities of enterprises. In the era of globalization the optimal choice of investment location gives enterprises an opportunity to profit maximization. As a result the governments competing for foreign direct investment offer to enterprises preferential tax treatment.

        In order to minimize the loss of tax revenue countries imposing high effective tax rates on enterprises implement diversified anti-tax-avoidance measures. One of these measures is controlled foreign corporation. The article examines the application of the controlled foreign corporation rules in the United States of America to combat harmful tax competition. It has to be underlined, that the American controlled foreign corporation legislation was a prototype for other countries that use this institution to prevent tax avoidance.

        The aim of this article is to review the controlled foreign corporation legislation in the USA, analyze the structure of CFCs and the structure of their subpart F income in this country and evaluate the efficiency of this anti-tax-avoidance measure. The author describes inter alia, implications of harmful tax competition and the CFC rules. As the provisions of controlled foreign corporation are also planned to be introduced in Poland, the American legislation might be a good example of its successful implementation.

References

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Avi-Yonah R.S., The OECD Harmful Tax Competition Report: A Tenth Anniversary Retrospective, „Brooklyn Journal of International Law”, Vol. 34, No. 3/2009.

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European Commission, Harmful tax competition, Code of conduct for business taxation, http://ec.europa.eu/taxation_customs/taxation/company_tax/harmful_tax_ practices (10.08.2013).

European Parliament, The draft of the European Parliament resolution of 21 May 2013 on Fight against Tax Fraud, Tax Evasion and Tax Havens (2013/2060(INI)), http://www.europarl.europa.eu (10.08.2013).

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Keightley M.P., An Analysis of Where American Companies Report Profits: Indications of Profit Shifting, Congressional Research Service, Washington 2013.

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OECD, A progress report on the jurisdictions surveyed by the OECD global forum in implementing the internationally agreed tax standard, http://www.oecd.org/ ctp/42497950.pdf (10.08.2013).

OECD, Harmful Tax Competition: An Emerging Global Issue, Paris 1998.

Redmiles M., Wenrich J., A History of Controlled Foreign Corporations and the For-eign Tax Credit, Internal Revenue Service, Washington 2012.

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Ekonomia i Prawo. Economics and Law

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Published

2014-09-30

How to Cite

1.
HYBKA, Małgorzata Magdalena. RESTRAINING HARMFUL TAX COMPETITION: AN ANALYSIS OF AMERICAN CFC LEGISLATION. Ekonomia i Prawo. Economics and Law. Online. 30 September 2014. Vol. 13, no. 3, pp. 377-388. [Accessed 6 July 2025]. DOI 10.12775/EiP.2014.027.
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