RESTRAINING HARMFUL TAX COMPETITION: AN ANALYSIS OF AMERICAN CFC LEGISLATION
Keywordsharmful tax competition, tax avoidance, controlled foreign corporation, USA
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.
Ault H.J., Bradford D.F., Taxing International Income: An Analysis of the U.S. System and Its Economic Premises, [in:] A. Razin, J. Slemrod (ed.), Taxation in the Global Economy, University of Chicago Press, Chicago 1990.
Avi-Yonah R.S., The OECD Harmful Tax Competition Report: A Tenth Anniversary Retrospective, „Brooklyn Journal of International Law”, Vol. 34, No. 3/2009.
Eicke R., Tax Planning with Holding Companies – Repatriation of US Profits from Europe: Concepts, Strategies and Structures, Kluwer Law International, Alphen aan den Rijn 2009.
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).
Gravelle J.G., Tax Havens: International Tax Avoidance and Evasion, Congressional Research Service, New York 2013.
Hamaekers H. et al., Wprowadzenie do międzynarodowego prawa podatkowego, Wy-dawnictwo Prawnicze LexisNexis, Warszawa 2006.
Harris P., Oliver D., International Commercial Tax, Cambridge University Press, Cam-bridge 2010.
Internal Revenu Code, Internal Revenue Service, http://www.irs.gov (10.08.2013).
Internal Revenue Service, U.S. Corporations and Their CFC, http://www.irs.gov (10.08.2013).
Keightley M.P., An Analysis of Where American Companies Report Profits: Indications of Profit Shifting, Congressional Research Service, Washington 2013.
Laity E.T., Defining Foreign Base Company Shipping Income and Oil Related Income, „Virginia Tax Review”, Vol. 20, No. 2/2000.
Lokken L., Foreign Base Company Sales Income under the New U.S. Regulations, University of Florida, Levin College of Law, Florida 2009.
Mahony L., Miller R., Controlled Foreign Corporations − 2008, Internal Revenue Service, Washington 2010.
McDaniel P.R., Ault H.J., Repetti J.R., Introduction to United States International Tax-ation, Kluwer Law International, The Hague 2005.
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.
Russo R., Fundamentals of International Tax Planning, International Bureau of Fiscal Documentation, Amsterdam 2007.
Smith E.P., Harmelink P.J., Hasselback J.R. (red.), Federal Taxation – Comprehensive Topics, CCH a Wolters Kluwer business, Chicago 2009.
The Legislative Council of the Prime Minister, The draft of 30th April 2013 on the amendment to the corporate income tax law and the personal income tax law, radalegislacyjna.gov.pl (11.08.2013).
How to Cite
Number of views and downloads: 244
Number of citations: 0