Taxing Large Businesses: Cooperative Compliance in Action

Intereconomics - Cooperative compliance represents a shift in thinking for tax administrations, away from a deterrence approach where taxpayers are coerced to comply with tax rules and threatened...     

Boundary work and tax regulation: A Bourdieusian view

Boundaries are ubiquitous in modern social life, and the work of creating and maintaining boundaries is particularly evident within regulatory fields. Through the analysis of a recent critical incident in the tax field (Arctic Systems) with which the accounting profession is intimately associated, this paper uses a Bourdieusian lens to unravel the relational complexities of the regulation of tax avoidance at the complex and fuzzy boundary between acceptable and unacceptable tax practice. We develop an alternative, relational interpretation of tax regulation and contribute to a more nuanced understanding of regulatory practice within the tax field that also raises questions about regulatory practice more widely. We conclude by highlighting how a move towards ‘relational’ regulation might contribute to improved understanding of regulatory processes and practices.     

Distinguishing closely held companies for taxation purposes: The Australian experience 1930-1972

Early in the life of Australia's income tax, the government, sensitive to loss of taxation revenue through artificial arrangements to divert taxable profits from individuals to companies where they would be taxed more lightly, saw fit to provide a special taxation regime for closely held companies. From the first attempts by the government to distinguish closely held companies for tax purposes in 1930, until the final legislative changes in 1972, there arose a highly unsatisfactory situation in which taxpayers sought, through increasingly artificial means, to subvert the legislative purpose with the aim of tax avoidance. The government's response throughout was inadequate in a number of respects, and fuelled the fires of tax avoidance through inept drafting of the relevant legislation and delayed treatment of perceived abuses by taxpayers.     

Securing the Repeal of a Tax on the 'raw material of thought'

When first introduced in 1712, and throughout the eighteenth century, the stamp duty on newspapers was primarily intended as a revenue raising measure with censorship as a subsidiary, but not unintended, by-product (Sadler & Oats, 2002). In the nineteenth century the stamp duty became known, more justifiably, as a 'tax on knowledge' and it was increasingly criticised as being an overt form of censorship. A campaign in the 1830s to have the tax repealed resulted in a compromise, in 1836, in the form of a significant reduction in the duty from 4d to 1d per half sheet of newspaper. The stamp duty was eventually repealed in 1855, largely as a result of the activities of 'The Newspaper Stamp Abolition Committee', a campaign run on different lines to that of the 1830s. This paper examines this second abolition campaign, which adopted unusual tactics in pursuit of the repeal of the tax. It demonstrates the tensions between social reformers and business interests in securing the repeal of a dysfunctional tax.     

Corporate tax avoidance: is tax transparency the solution?

Corporate tax avoidance has been a matter of considerable public attention, particularly since the 2008 global financial crisis. The nature of calls for tax reform and increased regulation, advocated most prominently by tax activists and NGOs, has revolved around transparency as a possible corrective to unacceptable tax avoidance, although there is no consensus as to what the term tax avoidance encompasses and when it becomes unacceptable. We examine two responses to calls for increased transparency about the tax affairs of multinational entities: firstly, country by country reporting that provides information to tax authorities, and secondly the UK requirement for publication of tax strategies, whereby large companies put information into the public domain. We find considerable misunderstanding about the benefits of transparency in this setting. By failing to consider the limits of transparency initiatives there is a risk of dysfunctional consequences, for example additional costs in providing and processing additional information, the prospect of increased disputes as new information generates new misinterpretations and uncertainty in determining the final tax position. There is a risk that greater disclosure will not effectively address concerns about unacceptable corporate tax avoidance.