GLOBAL PERSPECTIVES ON INCOME TAXATION LAW

Transcription

1 GLOBAL PERSPECTIVES ON INCOME TAXATION LAW Reuven S. Avi-Yonah, Nicola Sartori, and Omri Marian B OXFORD UNIVERSITY PRESS

2 Contents Preface / Foreword / xi xiii Introduction / xv 1. Some Theoretical Aspects of "Comparative Taxation" / 1 I. What is comparative taxation? / 1, II. Some possible approaches to the study of comparative tax law / 2 A. The functional approach to comparative tax studies / 4 B. Comparative tax law as a study of cultural differences / 7 C. The critical approach to comparative tax studies / 9 D. Comparative tax study as an exercise in economic analysis / The economic principles of taxation: efficiency, equity, and simplicity / 12 E. What to expect next / Taxable Income / 17 I. Taxable income definition: global vs. schedular and source vs. accretion / 17 II. Taxation of fringe benefits / 23 III. Imputed income from owner-occupied housing / 27 IV. Windfalls / 32 V. Damage awards / 34 A. Taxation of damage awards / The treatment of damage awards / The issue of deferred damage compensation / 37 B. Which "damages" receive favorable treatment? physical? mental? reputation? I 37 VI. Cancellation of indebtedness / 38 A. Inclusion of debt relief in gross income / 38 B. Exceptions to inclusion / 40 VII. Gifts and bequests / 40 A. Personal gifts and bequests / 41 B. Commercial gifts / 44 VIII. The realization requirement / 45 vn

3 viii / Contents 3. Deductions / 47 I. Business expenses / 48 A. Commuting, clothing, and other nondeductible expenses / Commuting / Clothing / 50 B. Child care costs / 51 C. Travel and entertainment / Business entertainment / Business travel / 54 D. Capital expenditures / 55 E. Depreciation / 56 - F. Business interest / 58 G. Losses I Capital losses / Other loss limitations / 61 II. Personal expenses / 61 A. Apportionment of personal/business expenses / 61 B. Medical expenses / 62 C. Charitable contributions / 64 D. Home mortgage and other personal interest / The Taxpaying Unit / 67 I. Introduction / 67 II. The basic issue and the two main models: how should we define taxable units? individual vs. family taxation / 67 A. Concrete examples of countries adopting the individual model I 70 B. Concrete examples of countries adopting hybrid solutions / 71 C. Concrete example of a country adopting the family model I 73 III. Anti-assignment of income rules / 73 A. The reason for anti-assignment of income rules / 73 B. The solutions adopted by some industrialized countries: examples I Tax Accounting / 77 I. The taxable period and the accounting period: general definitions / 77 A. Definitions, main issues, and possible solutions / 77 B. The solutions adopted by some countries: examples / 78 II. Cash model versus accrual model / 80 A. The accounting methods: cash versus accrual / 80 B. The solutions adopted by some countries: examples / 82 III. Net operating losses / 84 A. Main issue and possible solutions / 84 B. The solutions adopted by some countries: examples / 84

4 Contents / ix 6. Taxation of Capital Gains and Losses / 87 I. General definitions: capital gain and losses, realization, basis / 87 A. Definition of capital gain or loss / 87 B. The concept of realization and recognition / 89 C. The concepts of "basis" (orfiscalvalue) and "amount realized" / 91 II. Nonrecognition transaction and exemption transactions / 92 A. Nonrecognition transactions / 92 B. Examples of concrete policy choices / 94 III. Taxation of capital gains and capital losses: ordinary income vs. separate income / Tax Avoidance / 101 I. General definitions: tax evasion, tax avoidance, and licit tax savings / 101 II. Substance over form (the experience of common law countries) / 104 III. Abuse of law (the experience of civil law countries) / 105 IV. Hybrid solutions / Selected Business Tax Issues / 113 I. Introduction / 113 II. The definition of a business entity for tax purposes / 114 A. The importance of entity classification for tax purposes in the study of tax convergence / 114 B. Corporate entity definitions for tax purposes: examples from the G7 countries / Canada / France / Germany / Italy / Japan / United Kingdom / United States / i 127 C. Summary / 129 III. Corporate residency / 130 A. Conventional determinants of corporate residency / 130 B. Characterizing "real seat" of a corporate entity in the G7 / 134 C. Summary / 137 IV. Corporate tax rates / 137 V. Some general remarks on corporate tax base / 140 VI. Corporate/shareholders tax integration of distributed profits / 143 A. Definition of integration and general issues I 143 B. Some specific integration methods adopted by countries / 146

5 x / Contents 9. Selected International Tax Issues / 149 I. The basic distinction: global jurisdiction model vs. territorial jurisdiction model / 150 H. Definition of residence and source / 151 III. The two principles of international taxation: the single tax principle and the benefits principle / 156 IV. Outbound transactions / A. International tax rules that prevent double taxation I 158 B. International tax rules that prevent double nontaxation / 160 V. Inbound transactions / 164 VI. Tax treaty models: OECD, UN, and U.S. models / 165 Conclusion / 167 Index I 169