Substantive Tax Research Articles

CHANGES IN POLISH TAX LAW IN RESPONSE TO THE COVID-19 PANDEMIC AGAINST THE COMPARATIVE LEGISLATIVE CHANGES IN THE CZECH REPUBLIC AND SLOVAKIA

The article describes the most important characteristics of legislative changes made in the Polish tax law in connection with the COVID-19 pandemic. They undergo comparison with changes made in this branch of law in the Czech Republic and Slovakia. This juxtaposition serves the authors to show that the main trend was, in the first place, to suspend the deadlines in tax procedures. It was an ad hoc change and did not affect any significant changes in tax procedures in the long run. The authors also point to certain restraint of the Polish legislator as regards adoption of serious changes to substantive tax law during the period under examination and touch upon the issue of transferring certain competences (in terms of exemptions) from the legislative authority to: (1) local governments or (2) the executive branch.

Head Office Taxation Rules and Simplification of Compliance Costs of SMEs

This study performs a legal assessment of the proposed Directive on Head Office Taxation, and puts forward alternatives to overcome the identified concerns. It is structured around the building blocks of the proposal: (i) scope; (ii) access to the regime; (iii) substantive tax rules; and (iv) procedural tax rules. The study concludes with policy considerations on the proposed Directive’s impact on the strengthening of the European Union’s internal market.

An Inquiry into the Use and Reform of the New Zealand Foreign Trust Regime

This article describes how and to what extent New Zealand foreign trusts are used in international tax planning. It highlights the substantive tax policy concerns that remain outstanding despite the recent reform, and evaluates the political backdrop to reform process, concluding that greater transparency in tax policymaking is desirable.

Rozporządzenie jako źródło procesowego prawa podatkowego

The purpose of this paper is to provide a detailed characterisation of a regulation as a source of procedural tax law. A statutory norm of competence may constitute the basis for the issuance of executive acts in the form of the regulations by public administration bodies. Such a normative act, which is not self-contained, serves to implement the law, and thus regulates matters covered by the statutory regulation, specifying the provisions of the authorising act. Ordinances governing procedural relations contain abstract and general norms, and, in exceptional cases, specific norms. They also define the procedural relations necessary for the implementation of the norms of substantive tax law. Regulations may develop in a more detailed and comprehensive manner the provisions of tax procedure contained in laws. Therefore, the provisions of the tax law contained in regulations may influence the shape of the tax proceedings. The provisions of the ordinances may cover individual procedural steps and systemic issues related to entities responsible for specific procedural activities.

A Short Update on the Dow Chemical Canada Case: Downward Transfer Pricing Adjustments

Canada’s Federal Court of Appeal has reversed the decision of the Tax Court of Canada in the Dow Chemical Canada case, finding that the Tax Court lacked jurisdiction to judicially review and remediate the exercise by the tax authorities of their discretion in administering the tax law. The Tax Court, faced with the tax authorities’ unwillingness to provide a downward transfer pricing adjustment in one of two affected taxation years, had reasoned that making judgments about how the law applies is intrinsic to assessing income and accordingly within the jurisdictional competence of that Court to adjudicate substantive tax questions. The Federal Court of Appeal disagreed, basing its decision on a strict construction of the empowering statutes for each Court, drawing attention to decisions that taxpayers and their advisories must make in light of the separate jurisdictional competencies of the Tax Court and the Federal Court of Canada.

Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax

The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue. In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework of a global minimum corporate tax, known as Pillar Two. It aims to set a floor for corporate tax rates with various corrective measures so that multinational enterprises’ income will be taxed once in either source country or residence country at a substantive tax rate. Hence, Pillar Two is the first implementation of the “single tax principle” at the global level. Because Pillar Two requires an unprecedented amount of coordination among countries, it is important to understand Pillar Two thoroughly so that countries can maneuver the challenges of implementation, while still enjoying the ultimate benefit that would come from this global tax harmony. This Article analyzes the issues of tax competition and why most countries in the world have come to the conclusion that a global minimum tax is needed. This Article explains the single tax principle as the theoretical underpinning of Pillar Two, breaks down the principles and policies that comprise Pillar Two, and anticipates what promise and pitfalls passage of the global minimum tax will bring. Because the basis of Pillar Two is a direct extension of the Global Intangible Low Tax Income (GILTI) and Base Erosion and Anti-Abuse Tax (BEAT) provisions of the Tax Cuts and Jobs Act, it is reasonable to anticipate that the global minimum tax will be considered a success if it is implemented by all the G20 countries.

Making Tax Law Work: Improvisation and Forgotten Taxpayers in Partnership Tax

There is a growing awareness that federal tax law caters to a small number of wealthy and well-advised taxpayers without regard for the rest of the taxpaying public, and partnership tax is a prime example. This Article explains how complexity and indeterminacy have transformed partnership tax, harming millions of forgotten taxpayers who struggle to comply with their annual filing obligations. A root cause of this phenomenon is the professional culture among elite practitioners, policymakers, and scholars at the heart of the partnership tax system. The most troublesome provisions of partnership tax are also its most fundamental—namely the allocation rules that regulate how partners share a partnership’s taxable items. Complexity is a universal problem faced by partnerships at all levels of wealth, status, and sophistication, and the vast majority of taxpayers respond with improvisational tax compliance. Indeed, in remarkably diverse contexts, improvisation has replaced technical compliance as the norm in partnership allocations. Wealthy partnerships make a strategic choice to improvise, using “target allocations,” while poorer partnerships improvise because they have no other choice, routinely following “intuitive” tax law and hoping for the best. Reframing this complexity problem as a shared experience of all partnerships exposes the technical and cultural fractures of partnership tax in a new and different light. First, the technical rules governing partnership allocations do not work as designed for any category of partnership. A second, less explored fracture is the professional culture of partnership tax, which takes for granted the technical sophistication of substantive tax law without appreciating the distributional consequences of sustained complexity and improvisation. Partnership allocations require more than technical solutions. One necessary step is addressing the professional culture of partnership tax to rethink what it means for tax law to work. This Article proposes that partnership reforms developed by experts and directed at wealthy and well-advised partnerships should be accompanied by reforms addressing parallel problems faced by forgotten partnerships. The solutions will necessarily differ, but a bilateral focus on the universal problems of all partnerships would represent meaningful progress, signaling a commitment to a fair, principled, and representative system of partnership tax.

Death and taxes: Estate duty – a neglected factor in changes to British business structure after World War two

This paper will examine Estate Duty(ED) and its impact on the structure of smaller British businesses. ED was one of the most controversial and wide-ranging taxes ever imposed in the UK. It was the first substantive tax on capital. It was partly responsible for the reconfiguration of British business in the 1940s- 1950s as businesses sought to avoid the Duty with measures which could result in the loss of a family firm to the ‘corporate economy’. Examining this phenomenon adds a hitherto unexplored dimension to the arguments of business historians surrounding the structure of British business and its relative performance after World War II.

Taxing Profit and Consumption in Market Jurisdictions: Equity and Administrability in the Digital Era

Against the backdrop of a digitalized economy and a multitude of digital business models, policymakers from around the world are seeking consensus concerning an appropriate allocation of taxing rights. While there is widespread acceptance that consumption taxes should be levied in market jurisdictions, this is not yet the case in corporate income taxation. In an effort to counteract base erosion and profit shifting and more generally, reduce tax avoidance opportunities, the international community is now working to advance the ‘destination principle’ in a broader context. The notion of taxing profit and consumption in market jurisdictions can further equity among states. However, taxation in market jurisdictions can be afflicted with considerable tax compliance and enforcement difficulties, which can lead to inequitable results among taxpayers. To effectively tax digital business models in market jurisdictions, innovative approaches in substantive tax law and tax enforcement are needed. As the authors argue in this paper, proxies can be useful regulatory tools to ensure administrability of a destination-based tax system. In this context, however, policymakers must strike a balance between administrability and equity. The common system of value added tax (VAT) in the European Union (EU) has utilized various proxies and structural enforcement mechanisms to simplify tax compliance and enforcement in the digital context for years. In the authors’ view, they enhance effectiveness of the tax system without renouncing tax equity and have set an example for novel regulatory approaches currently under debate for corporate income taxation.

The Tax Gap's Many Shades of Gray

The “tax gap”—the difference between the amount of “true tax” and the amount of tax actually paid—has garnered widespread attention in recent months. Much of the commentary on the subject equates the tax gap with “tax evasion,” a term broadly understood to connote intentional (and potentially criminal) underreporting. This paper cautions against conflating the tax gap with tax evasion. The tax gap includes substantial gray areas where the law is ambiguous and the IRS’s determination of “true tax” is debatable. On top of that, the IRS’s methodology for measuring the tax gap includes upward adjustments that are recommended by front-line examiners but reversed on administrative appeal or judicial review. Moreover, a substantial portion of the estimated tax gap is derived from a statistical technique called “detection controlled estimation” that potentially magnifies the impact of later-reversed recommendations on the ultimate tax gap measure. Weighing in the opposite direction, the IRS’s approach to measuring the tax gap excludes some amounts that clearly constitute tax evasion (most significantly, underreporting of tax on illegal-source income). Understanding the tax gap’s shades of gray can inform discussions of tax law and policy. We explain how proposals to use the tax gap as a performance target may produce perverse incentives for the IRS. We further explain how additional IRS funding—though necessary to improve the agency’s ability to enforce the tax laws—may have counterintuitive effects on the estimates of the tax gap. We also illustrate—using examples from the taxation of passthrough entities—how legislative reforms can reduce the size and scope of legal gray areas that contribute to the tax gap. Our analysis highlights the importance of increased IRS funding levels and substantive tax law changes as complementary strategies for improving tax compliance.

Contemporary Tax Issues Related to Farmers and Ranchers

In the United States, farmers and ranchers account for one percent of GDP and utilize 40 percent of the land in the 48 contiguous states Tax statutes can appear -within any law passed by Congress Recent tax legislation provides tax benefits for farmers and ranchers This paper will discuss the substantive tax provisions impacting or directed at these economic enterprises that appear in four recently passed legislative acts: (1) Tax Cut and Jobs Act of 2017;(2) Agriculture Improvement Act of 2018;(3) Families First Coronavirus Response Act;and (4) Coronavirus Aid, Relief, and Economic Security Act of2020

EL FRAUDE A LA LEY FISCAL EN EL DERECHO TRIBUTARIO URUGUAYO

Fraud against tax laws is addressed, mainly as a possibility to achieve, by means of the taxable event, certain acts and transactions that, without being set forth under such tax laws, have the same material foundation as provided for therein. The concept of fraud against the law within the scope of private law as well as structural elements thereof are examined, in addition to its differences in comparison to other concepts that also include fraud, such as fraudulent conveyance and disregard. The evolution of the handling of acts and transactions in our tax law is studied, as well as the differences with the mechanisms to control fraudulent acts, such as economic interpretation and teleological interpretation, which extend, by analogy, the taxable event , and generic anti-avoidance regulations, which redirect such act or transaction to a taxed form. The admissibility of a concept of tax law fraud is assessed, which, based on a conclusive interpretation, proposes a concept of wrongfulness based on the violation of tax law principles. Finally, the use of substantive tax law towards acts or transactions compliant with the law’s wording, but not its meaning, that seek to avoid any taxable event is reviewed.

Study on Income Tax Enforcement of Family Trusts: Based on the Principle of Substantial Taxation

Family trust is an important innovation in the development of financial technology and digital economy. As an innovative method for family business wealth preservation, appreciation and inheritance, family trusts play an important role in financial markets and social safety nets. The healthy operation of family trusts is inseparable from a good tax collection and management system. This study is based on case analysis and international comparative law, combined with the particularity of family trusts, and analyzes the risks that may be faced in its income tax enforcement. The research found that the insufficient regulations of family trust policies make tax collection and administration face the risks of double taxation, tax loss, and high tax administration cost. Based on the substantive tax principles and the perspective of the sustainable development of family trusts, the research puts forward suggestions on the improvement of income tax collection and management in Chinese family trusts: The design of family trusts and taxation systems should insist on substantive taxation; combine the theory of trust conduit with the theory of trust entities; clarify the time, scope, beneficiary, and choice of accounting standards for family trust collection. In the era of digital economy, governments, enterprises, and educational institutions have formed partnerships to strengthen the education of family trust investors on financial, taxation, and digital economy requirements. Taking the sustainable development of family trusts as the starting point, build a new momentum and social safety net for China's economic and social development.

American Voices in a Changing Democracy: Women, Lobbying, and Tax, 1924-1936: Part 1 Introduction

This Part I introduces my book AMERICAN VOICES IN A CHANGING DEMOCRACY: WOMEN, LOBBYING, AND TAX 1924-1936. The book focuses on the intersection of three areas of change in a time of great change: the role of women, the role of lobbying (broadly defined), and the role of taxation. These areas are once again in flux today. Each area is important in itself and each underwent significant change during this time period that affected important aspects of American life. Combined, the three areas illuminate the interrelated nature of society, economics, government and politics. The book is not about lobbying, women, or taxation per se, but about the intersection of these three elements in a period of generally rapid change. Each element is important to democracy and each underwent great changes during the relevant years. Viewing the interaction of the three elements provides not just insight into each strand but expands our knowledge of democracy’s responses to change in an era similar to our current times in many ways: rapid technological change, demographic changes, economic stresses, and political change. Tax-phobic readers should rest easy. The book is not about substantive tax; rather it uses tax as a medium to examine women and lobbying. Consequently, readers need not know any tax—or even be all that interested in tax. The book contains no technical tax or substantive tax policy. Rather, it concerns one aspect of the social construction of tax policy: the influence of mid-level lobbying on public opinion regarding taxes as manifest from one perspective—women’s political action. All the reader needs to know by way of background about taxes, is found in Part D of Chapter I. Although the tax-aholic will be unable to satisfy a technical tax thirst, the tax-ophile will still find a satisfying feast of material about the central role taxation plays in America. This Introduction lays out the scope, purpose and organization of the book. It sets the stage by briefly describing the changing technology, culture and government that underlay the changes affecting women, tax and lobbying. It proceeds to explain the choice of the time period and concludes with a note about research techniques.

Die Verwirklichung steuerlicher Lasten im System der Steuerrechtsordnung

Over the past decades, German tax law has systematically ordered the substantive tax law of Germany. However, the question of how tax burdens can actually be realized in practice has so far been viewed primarily as a problem of tax procedural law. The following article attempts to extend the general system of German tax law to covering this aspect. For this purpose, the article makes reference to the so called "Steuerungstheorie" developed in German public law. The article explains on this basis the importance of tax compliance from a systematic point of view for tax law.

Is Mediation the Panacea to the Profusion of Tax Disputes?

Several countries are intending to implement mediation in their domestic tax law procedures in order to deal with an increasing amount of appeals. This article researches how the principles of mediation should be applied in tax law in order to achieve an effective dispute resolution procedure. For this research, the author compared four different countries that have many years of experience with mediation in substantive tax disputes. The study follows a multidisciplinary perspective to explain why certain choices regarding mediation in tax law have failed while others have succeeded. This article will outline the effectiveness of mediation as a dispute resolution procedure in tax law.

Neuplaćivanje poreza - poreski prekršaj obveznika - fizičkog lica

The Law on Tax Procedure and Tax Administration prescribes numerous tax misdemeanours which are normatively divided into two categories. The first category includes general tax misdemeanours of legal persons and entrepreneurs, and the second one includes the so-called special tax misdemeanours. The subject of this paper deals with tax misdemeanour of an individual tax payer who is a natural person (and not an entrepreneur) and who does not pay the tax amount determined in his tax return or in the decision of the Tax administration. Our analysis is made primarily of legislation and the available Serbian and international jurisprudence. We will point out that the aforementioned misdemeanour can be disputed based on the reach of its zone of incrimination. This paper will also show that it is possible to violate prohibition of double jeopardy principle at the expense of tax payers due to the systematic disharmony of substantive tax law and administrative (procedural) tax law with provisions that prescribe tax misdemeanour. The final result of this paper and the added value to the Serbian tax law are our proposals referring to legislation amendments de lege ferenda. We suggest that the tax misdemeanour from article 180, point 2 of the Law on Tax Procedure and Tax Administration needs to be erased. We strongly argue that enforcement of tax collection needs to remain within the tax enforcement procedure and that there is no legal justification to prosecute tax payers that are late on their tax payment. Tax administration has sufficient mechanisms to collect taxes owed to them.

The Judicial System of Cyprus and Taxpayer Rights

Taxpayer rights have attracted a lot of controversy in Cyprus in recent decades. The lack of an independent body to refer substantive tax cases to and easy access to tax information around the world have adversely affected the attitudes of taxpayers and professionals regarding the credibility of the tax system. Taxpayers have always felt that they were not being treated equitably and professionals have struggled to find solutions with the Tax Department. This note discusses these concerns and recent developments.

The Report Ways to Tackle Cross-Border Obstacles Facing Individuals Within the EU

In 2015 the Expert Group of the European Commission published a report identifying various procedural and substantive tax obstacles that individuals face when operating across borders in the internal market. Regarding the identified tax obstacles, the Expert Group proposes both hard and soft law solutions which would require legislative cooperation of the Member States as the focus has been on those obstacles that cannot be tackled by the European Court of Justice (ECJ) as they qualify as disparities or justified restrictions on the fundamental freedoms. In this article the authors discuss the various substantive tax obstacles and the proposed solutions. The authors subscribe to the view of the Expert Group that harmonization of direct taxation for individuals would be beneficial for enhancing the internal market. Regarding the way in which harmonization can be achieved, the authors would prefer a directive or multilateral treaty including a one-stop-shop.

Taxation and the European Convention for the Protection of Human Rights: Substantive Issues

When the European Convention on Human Rights (ECHR) was agreed, clearly it did not apply to substantive tax issues. The author aims to show that there is nothing to suggest that the inclusion of the protection of property rights in paragraph 1 of the First Protocol to the Convention represented a change in this respect. In spite of this, there is in the literature considerable enthusiasm for the notion that the Convention is also important as regards this issue. The author examines the jurisprudence of the European Court of Human Rights (ECtHR) in cases which involve substantive tax issues, and argues that the Court, with the help of the concept of an extraordinary margin of appreciation, has indeed shown great reluctance towards getting involved in these issues. This approach is applauded, and it is argued that the old notion that taxation is a fundamental part of national sovereignty, is still valid, and that it justifies the restraint shown by the ECtHR. The question of legal security for taxpayers – to the extent that this principle is also relevant to substantive issues – must be balanced against the principle of effectivity. Thus, the solutions to legal security issues in this sphere of the law may well differ from the solutions to parallel questions in other legal contexts.