Corporate Loss Utilisation Through Aggressive Tax Planning PDF Download

In his paper, “The Use of Cross Border Corporate Profits and Losses and “Global Corporate Tax Information”: A Game Theory Approach”, Garbarino (2014) highlights three concerns about cross border consolidation:- The inclusion of losses of foreign affiliated companies or permanent establishments (PEs) in the residence country, which triggers the erosion of the national tax base;- Losses of foreign affiliated company or PE, which may be used in the country where the affiliated company or PE is located (through carry forward, carry back, local techniques of consolidation); as well as where the controlling company is located (losses used to offset profits/reduce tax obligations more than once - where affiliated company or PE is located AND also where controlling company is located);- Losses of foreign affiliated companies or PEs used creatively for purposes of offsetting domestic profits - but which may not be audited directly by those tax authorities of those countries.As well as considering the possible additional scenarios whereby the “game theory model” used in his article, are able to operate, this volume also highlights, through other models, why certain multinational firms are able to exploit information gaps in executing and designing sophisticated tax planning procedures that reduces their overall tax burdens and obligations.Further, information asymmetries in respect of the disadvantaged country (owing to lack of sufficient information base), as well as knowledge base available to the country which commands dual capacities as residence and source country, and is not only able to serve in both capacities, but also afforded immense and valuable knowledge/information base, by virtue of such positions, may leave such a highly advantageous party in a privileged position whereby tax planning practices are effectively designed in such a way that they cannot be really categorized as “ aggressive tax planning policies” which warrant or attract regulatory penalties or sanctions.From the perspective, the volume also aims to highlight and recommend possible roles for forensic accountants. Further, this paper (outline of the volume) briefly highlights a consideration of the afore mentioned points and conditions under which the suggested and proposed additional scenarios are able to operate.