US taxman eyes offshore vehicles

US taxman eyes offshore vehicles

The US Internal Revenue Service is launching a crackdown on special purpose vehicles used to avoid tax in a move that could have major ramifications for financial institutions around the world

The body, headed by Mark Everson, is planning to stop US financial
institutions from setting up structures outside the country that avoid tax
through a partnership with a foreign bank. The set-ups see the institution and
its foreign partner pool assets and pay tax on the assets in the country where
they are held.

The US company then claims a tax credit on the foreign tax paid to avoid
double taxation, while the foreign partner also claims a tax credit. This
structure allows the foreign partner to lend cash to the special purpose vehicle
at lower interest rates.

The IRS has put forward proposals to block the use of special purpose
vehicles which will be debated at a public hearing in Washington at the end of
July.

The move comes as US politicians launch a new wave of attacks on the tax
avoidance industry both at home and worldwide.

Presidential candidate Barack Obama has backed a bill to crack down on tax
havens in particular.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource