New tax treaty will close loopholes that allow multinationals to avoid tax


Miranda Stewart, Australian National University

Australia, with another 70 countries, has signed a multilateral treaty to create more coherence in fighting tax avoidance by large multinational corporations. The Multilateral Convention to Implement Treaty Measures to Prevent Base Erosion and Profit Shifting, or BEPS Convention, aims to close loopholes in the international tax system that result from differences in individual country tax systems.

Countries are fiercely protective of their own tax sovereignty and claim the right to set their own company tax rate and base. But this can result in lower company tax around the globe, as multinational enterprises can move capital investment to lower tax jurisdictions and take advantage of tax havens to reduce their global tax bill. This latest treaty will help to overcome this problem.

Since the global financial crisis, nearly a decade ago, the G20 countries have tried to reform international tax with a Base Erosion and Profit Shifting (BEPS) project. Australia has been a strong supporter of the BEPS project since it started, including as chair of the G20 in 2014.

This project resulted in 15 actions that were endorsed by the G20 in 2015. The signing of this tax treaty implements action number 15 to amend existing tax treaties to limit international tax planning.

The other BEPS actions aim to strengthen enforcement, remove inconsistencies in national tax rules, enforce disclosure of corporate tax profits in havens and encourage sharing of tax information between country revenue agencies.

Australia can’t go it alone on international tax

International tax cooperation remains critical and this BEPS Convention enables an anti-abuse framework to be embedded in Australia’s treaty network.

In the last century, countries around the world have negotiated bilateral tax treaties, producing a network of thousands of treaties. Australia alone has about 45 bilateral income tax treaties.

The main goal of bilateral tax treaties has been to prevent double taxation of international business where it operates in more than one country. But the terms of tax treaties can also be used to minimise tax. For example, a company may have significant business sales in a country – like Google in Australia – but under a treaty rule, it may not be treated as having a business presence there.

How does the BEPS Convention amend tax treaties?

Without this multilateral convention, it could take decades for countries to renegotiate these bilateral tax treaties. Where countries sign up, the new rules will take effect as soon as each country has ratified the convention.

The BEPS Convention is the first ever multilateral tax treaty that modifies substantive tax rules. Even the speed of signing the BEPS Convention is unprecedented: from treaty mandate to signature has been only 18 months. Most multilateral treaties take much longer, such as the Trans-Pacific Partnership, which has been in negotiation for more than nine years (and may not ever be agreed).

A leading British tax lawyer observed that the BEPS Convention is “not tax peace in our time”. But it is still significant.

The convention inserts a new anti-abuse rule which states that tax treaties are not to be used to abuse national tax laws, if a taxpayer uses a treaty rule for the principal purpose of reducing its tax liability in a country. The convention will also make changes to prevent mismatches in treaty tax rules and to end the artificial avoidance of a business tax presence in a country, for example by using a separate company to do its operations under a contract.

To push governments to resolve tax disputes, the convention inserts an arbitration clause into treaties. If two countries cannot resolve a treaty dispute, then after two years (and if no court case is on foot), it will go automatically to an independent arbitrator who can make a decision that binds the governments and taxpayer. Its controversial and many countries may not agree to arbitration but Australia has signed up to it.

Australia has adopted most of the BEPS Convention measures, as being consistent with its current tax treaty policy. But many countries, including Australia, will need to enact domestic legislation to bring the convention into law.

Once countries sign up, the treaty changes will take place immediately – this could amend as many as 30 of Australia’s treaties.

The future international tax architecture – but without the US?

The BEPS Convention was signed by more than 70 countries. This includes leading signatories such as China, Germany (the current G20 Chair), the United Kingdom, France and Japan and also several low tax financial centres like Singapore and Ireland. But the United States did not sign.

The US failure to sign is hardly surprising. It comes one week after President Trump withdrew the US from the Paris Climate Agreement. It’s another example of the US retreating from multilateral cooperation on issues affecting all nations.

The US also did not sign the Tax Administrative Convention, now with 111 country members, which provides the legal basis for the country by country exchanges of information about global profits for billion dollar companies, including with the Australian Tax Office. Instead the US insisted on “going it alone” with its Foreign Account Tax Compliance Act, or FATCA regime, which demands foreign countries provide data on US citizens.

Many US tax treaty provisions are in line with the BEPS Convention. But surely that misses the point of multilateralism in tax or any other field of global concern. Instead, we see China is taking a leading role in multilateralism. It is unclear what the US stance will mean for international tax in the longer term. However, this treaty will give some help to other countries aiming to tax global profits of US multinationals, including Google, Apple and Uber, while those companies lobby for the US to reform its own company tax laws.

The ConversationThe pace of international tax change is usually glacial and most country co-operative efforts go nowhere. The BEPS Convention provides, for the first time, an international legal architecture for future multilateral tax reform.

Miranda Stewart, Professor and Director, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University

This article was originally published on The Conversation. Read the original article.

Iraq urges U.S. to send ground troops as ISIS jihadists close in on Baghdad


National Post | News

Iraqi officials issued a desperate plea Saturday night for America to provide ground troops, as heavily armed ISIS jihadists came within striking distance of Baghdad.

[np_storybar title=”Conrad Black: Fixing the Middle East, for now and forever” link=”http://fullcomment.nationalpost.com/2014/10/11/conrad-black-fixing-the-middle-east-for-now-and-forever/”]

Prime Minister Stephen Harper and Foreign Minister John Baird are certainly correct to support Canada’s traditional allies in attacking the Islamic State (IS). It is such an unspeakably odious organization that it is beyond normal political discourse and as many as possible of its active adherents should be killed or otherwise eliminated as quickly as possible. Further, anything that seems to reactivate the Western Alliance, the most successful in world history, is a good thing. It has recently fallen to a somnolent condition even less fearsome than the former “coalition of the willing,” i.e. we’ll do it if we’re threatened ourselves but otherwise we’ll just be happy with a U.S guaranty of our…

View original post 1,273 more words

Cricket: The Ashes Report – 15 July 2013


In the end it was a very close match that England won and Australia lost. The first test of the current Ashes series is over with plenty of controversy and action a plenty. It was a great game, though sadly it will be remembered for the controversy surrounding the DRS as much as for the game itself. But having said that, Australia really did a bad job in the way it used the DRS system, while England handled the DRS masterfully and full credit to them. With just 14 runs between the two sides, the second test has a lot to live up to following this match.

I can’t really make any useful comments on the English team, but as far as Australia is concerned I think it is time for Ed Cowan to be shown the door and for David Warner to return. Failing the return of Warner, who I believe has been sent to Africa with Australia A for some batting practice, perhaps it is time for the return of Usman Khawaja. The Australian batsmen really need to lift their game, because in reality the match was a lot closer than it should have been and they have the lower order to thanks for that – particularly the bowlers.

As for the bowling effort – work needs to be done also. There was far too much waywardness in the fast bowling ranks. Thankfully Nathan Lyon should be banished to the sidelines given the performance of Ashton Agar – a spinner who actually spins the ball and he can bat, which is very handy in the absence of a reliable upper order.

Romania: Latest Persecution News


The link below is to an article reporting on the latest persecution news out of Romania, where the government is trying to close down churches with less than 200 people.

For more visit:
http://www.mnnonline.org/article/17497

Article: China Seeking to Close Sichuan Church


The following link is to an article reporting on Chinese attempts to close a large church in Sichuan .

http://www.christiantelegraph.com/issue16454.html

Latest Persecution News – 15 May 2012


Sudanese Authorities Close Christian Offices in South Darfur

The following article reports on the latest news of persecution in Sudan, where Sudanese security agents closed down relief group offices in South Darfur.

http://www.compassdirect.org/english/country/sudan/article_1537735.html

 

The articles linked to above are by Compass Direct News and  relate to persecution of Christians around the world. Please keep in mind that the definition of ‘Christian’ used by Compass Direct News is inclusive of some that would not be included in a definition of Christian that I would use or would be used by other Reformed Christians. The articles do however present an indication of persecution being faced by Christians around the world.

Persecution News: What was Missed While on My Break – Part 4


The following are articles from Compass Direct News from the period I was on my break:

 

Plinky Prompt: Share the Most Dangerous Thing You've Ever Done For Fun



Waterfall

Hmmm, I generally play it safe I have to admit – but occasionally I do do something stupid and/or dangerous during my normal activities. This generally happens when I’m out bushwalking, though I find myself being more cautious these days.

Some of the most dangerous situations I have found myself in while bushwalking have been when trying to ascend/descend waterfalls. I have fallen on several occasions now and on one occasion suffered some injuries that required me to abandon the rest of my walk/climb on that day.

On another occasion I fell and landed far too close to what was effectively a spear, right beside by throat.

Some falls like these do tend to lead you to more caution in future times.

Powered by Plinky

 

India Briefs


Recent Incidents of Persecution

Karnataka, India, April 15 (CDN) — Police on April 10 arrested a pastor and other Christians of the New India Church in Mysore after some 25 Hindu extremists from the Sreeram Sena attacked their Sunday service, accusing them of forcible conversions, reported the Mathrubhumi daily. Pastor Vinod Chacko was leading the service when the Hindu nationalists barged into the church, stopped the prayer service and complained to police of alleged forcible conversions. The Global Council of Indian Christians reported that the extremists along with police detained the worshippers inside the church building, including 20 women and 10 children, taking down personal details about them and asking them whether they were paid money or otherwise lured to attend. Police also seized vehicles belonging to the church and those attending the service. Police charged Pastor Chacko, his wife Asha and others identified only as Sabu, Simon and Sayazu under section 295A of the Indian Penal Code with “deliberate and malicious acts intended to outrage religious feelings.”

New Delhi – A mob of about 150 Hindu extremists on April 9 attacked a Christian worship meeting in Bhajanpura, East Delhi, beating Christians with clubs and stones, including women and children. Pastor Solomon King told Compass that the Assembly of God church organized an open-air “Festival of Deliverance” meeting at which he was speaking; there were about 150 people in the arena when he arrived with 40 choir members. After the meeting began at about 6 p.m., some present suddenly shouted “Jai Shri Ram [Praise Lord Ram]” and started beating the Christians. Two Christians identified only as Prabhu and Abhisek sustained head injuries and received hospital treatment. Pastor King, his wife and other Christians also suffered bruises. The intolerant Hindus also destroyed furniture, a sound system, a generator and some Christians’ vehicle. The Christians had received permission from government officials to conduct the worship meeting, and five police officers were on duty to protect it; the Hindu extremists also severely beat them. The attack lasted for about an hour before police reinforcements arrived, and the extremists fled. Police were able to arrest two of the assailants.

Madhya Pradesh – An enraged mob of Hindu extremists on April 7 stormed into the prayer meeting of a Christian Assembly house church shouting anti-Christian slogans and filed a police complaint of forceful conversion against those present in Sagar. The Hindu extremists accused Pastor Joy Thomas Philip of forceful conversion, Pastor C.P. Mathew of Bhopal told Compass. Police arrived and took Pastor Philip and three other Christians into custody for questioning but claimed it was a protective measure. After area Christian leaders’ intervention, the Christians were released on bail on April 9.

Karnataka – Mulki Circle police officials on April 4 forcibly took church documents from Hebron Assembly Church in Mulki and told the pastor not to allow any Hindus to enter. The Global Council of Indian Christians reported that officials identified only as Inspector Shivaprakash and Sub-Inspector Neelakanta, along with five police officers, verbally abused Pastor I.D. Prasanna and harshly denigrated church activities. Police officials questioned Pastor Prasanna for three hours, telling him what church activities he can and cannot undertake, and threatening to close the church if he disobeyed. They also ordered the pastor to give detailed information about the families that attended the church service.

Karnataka – Police in Shimago on April 3 detained Pastor Abraham K.G. and a Christian identified only as Eerappa for their faith in Christ. The Global Council of Indian Christians (GCIC) reported that Hindu extremists led by area Bajrang Dal member Subbraya Shetty interrupted the worship meeting of the Jehovah Nizzi church and warned them to stop meeting. The extremists had been harassing the pastor since March 27, reported the GCIC. As the April 3 service started at about 10:30 a.m., a sub-inspector from the Hosanagara police station arrived in a Jeep with three other police officers to make the arrests. When the Christians asked about the reasons, the officials said without basis that the Christians were using abusive language. Later that evening, police released the Christians without charges after taking a statement from them pledging that they would conduct no future worship meetings – and that they should leave the area.

Report from Compass Direct News
http://www.compassdirect.org

Church in China to Risk Worshipping in Park


Evicted from one site and denied others, unregistered congregation resorts to open air.

LOS ANGELES, April 7 (CDN) — One of the largest unregistered Protestant churches in Beijing plans to risk arrest by worshipping in the open air this Sunday (April 10) after eviction from the restaurant where they have met for the past year.

The owner of the Old Story Club restaurant issued repeated requests for the Shouwang Church to find another worship venue, and authorities have pressured other prospective landlords to close their facilities to the 1,000-member congregation, sources said. Unwilling to subject themselves to the controls and restrictions of the official Three-Self Patriotic Movement (TSPM), the congregation has held three services each Sunday in the restaurant for more than a year.

Church members have said they are not opposed to the government and are not politically active, but they fear authorities could find their open-air worship threatening.

“Normal” (state-sanctioned) religious assembly outdoors is legal in China, and even unregistered church activity is usually tolerated if no more than 50 people gather, especially if the people are related and can cite the gathering as a family get-together, said a source in China who requested anonymity. Although the congregation technically risks arrest as an unregistered church, the primary danger is being viewed as politically active, the source said.

“For a larger group of Christians to meet in any ‘unregistered’ location led by an ‘unregistered’ leader is illegal,” he said. “The sensitivity of meeting in a park is not being illegal, but being so highly visible. Being ‘visible’ ends up giving an impression of being a political ‘protest.’”

The congregation believes China’s Department of Religious Affairs has overstepped its jurisdiction in issuing regulations limiting unregistered church activity, according to a statement church leaders issued this week.

“Out of respect for both the Chinese Constitution [whose Article 36 stipulates freedom of worship] and Christian conscience, we cannot actively endorse and submit to the regulations which bid us to cease all Sunday worship activities outside of [the] ‘Three-Self Patriotic Movement’ – the only state-sanctioned church,” according to the statement. “Of course, we still must follow the teachings of the Bible, which is for everyone to submit to and respect the governing authorities. We are willing to submit to the regulations with passivity and all the while shoulder all the consequences which . . . continuing to worship outside of what is sanctioned by these regulations will bring us.”

The church decided to resort to open-air worship after a prospective landlord backed out of a contractual agreement to allow the congregation to meet at the Xihua Business Hotel, the church said in its statement.

“They had signed another rental contract with another property facility and announced during the March 22 service that they were to move in two weeks,” the source said. “In spite of the fact that they had signed a formal contract, the new landlord suddenly called them on March 22 and refused to let them use the facility.”

The landlord offered various excuses for reneging on the contract, according to church leaders, and that disappointment came after 15 months of trying to obtain the key to another property the church had purchased.

“The space in Daheng New Epoch Technology building, which the church had spent over 27.5 million RMB [US$4.2 million] to purchase, has failed to hand the key over to the church for the past year and three months because of government intervention,” the church said in its statement. “For the past year, our church has not had a settled meeting place.”

Beginning as a house church in 1993, the Shouwang Church has been evicted from several rented locations. It also met outside after its last displacement in 2009. The congregation does not believe its calling is to split up into smaller units.

“For the past several years the church has been given a vision from God to be ‘the city on a hill,’” the source said. “Especially since 2009, when they officially began the church building purchase, they have been trying to become a more officially established status. At this point, they feel that they have not completed the journey in obedience to God.”

The number of Protestant house church Christians is estimated at between 45 and 60 million, according to Yu Jianrong, a professor at the Chinese Academy of Social Sciences Rural Development Institute. Yu and others have concluded that house churches are a positive influence on society, but the government is wary of such influence.

Yu estimated another 18 to 30 million people attend government-approved churches – potentially putting the number of Christians higher than that of Communist Party members, which number around 74 million.

The government-commissioned study by Yu and associates suggested that officials should seek to integrate house churches and no longer regard them as enemies of the state. The study employed a combination of interviews, field surveys and policy reviews to gather information on house churches in several provinces from October 2007 to November 2008.

Yu’s team found that most house or “family” churches fit into one of three broad categories: traditional house churches, open house churches or urban emerging churches. Traditional house churches were generally smaller, family-based churches, meeting in relative secrecy. Though not a Christian himself, Yu attended some of these meetings and noted that the focus was not on democracy or human rights but rather on spiritual life and community.

The “open” house churches were less secretive and had more members, sometimes advertising their services and holding public gatherings, he found. Urban emerging churches functioned openly but independently of TSPM churches. In some provinces such as Wenzhou, these churches had constructed their own buildings and operated without interference from local officials.

While some house churches actively seek registration with authorities to avoid arrests and harassment, they would like the option of registering outside the government-approved TSPM structure, as they disagree with TSPM beliefs and controls. Many unregistered evangelical Protestant groups refuse to register with TSPM due to theological differences, fear of adverse consequences if they reveal names and addresses of church leaders or members or fear that it will control sermon content.

Report from Compass Direct News
http://www.compassdirect.org