Unitary Taxation of the Finance Sector
Sadiq, Kerrie (2014) Unitary Taxation of the Finance Sector. Institute of Development Studies. [Working Paper]
Multinational financial institutions (MNFIs) play a significant role in financing the activities of their clients in developing nations. Consistent with the ‘follow-the-customer’ phenomenon which explains financial institution expansion, these entities are increasingly profiting from activities associated with this growing market. However, not only are MNFIs persistent users of tax havens, but also, more than other industries, have the opportunity to reduce tax through transfer pricing measures. This paper establishes a case for an industry-specific adoption of unitary taxation with formulary apportionment as a viable alternative to the current regime. In doing so, it considers the practicalities of implementing this by examining both definitional issues and possible formulas for MNFIs. This paper argues that, while there would be implementation difficulties to overcome, the current domestic models of formulary apportionment provide important guidance as to how the unitary business and business activities of MNFIs should be defined, as well as the factors that should be included in an allocation formula, and the appropriate weighting. This paper concludes that unitary taxation with formulary apportionment is a viable industry-specific alternative for MNFIs.
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|Item Type:||Working Paper|
|Keywords:||International Tax, Unitary Tax, Formulary Apportionment, Taxation of Banks|
|Subjects:||Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100) > Taxation Accounting (150107)|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
|Copyright Owner:||Copyright 2014 Kerrie Sadiq|
|Deposited On:||28 Aug 2015 05:47|
|Last Modified:||28 Aug 2015 05:47|
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