Taking Away the Tax Effect of Tax Havens. Cross border taxation methods and REVERSE TAX CREDIT

  • All the main techniques used for capital fiight can be grouped into one area – abuse of cross-border regulation. 
  • Tax credit is already an approved method for dealing with revenues cross-border together with withholding taxes.
  • Reverse Tax Credit can use the tax credit principles to deal with costs cross-border and eliminate the “need” for tax havens. 
  • Reverse Tax Credit can be enacted unilaterally by any country, and will automatically leverage the playing fields between companies, large or small, multinational or not.  

 

  • What is Reverse Tax Credit method?
    • Reverse Tax Credit method is a universal method that can be used unilaterally by any country, but which will benefit the world better the more countries that implement it.

    • The method will not only put national companies in the same competitive position as multinational companies, but will also eliminate the differences between highly aggressive multinational companies and less aggressive multinational companies.

 

  • Hvorfor er Omvendt Kreditfradrag viktig?
    • All the major issues in today’s taxation stem from cross-border transactions and services. All solutions thus need to stem from tax mechanisms that handle such transactions. Most of the tax mechanisms we need to fix the problems already exist, it is mostly a matter of combining them in the right structure and determine the correct tax level.

      For income there exist tax credits to prevent double taxation. By reversing the tax credit mechanism and apply it on deductions, one can easily ensure that it is not possible to achieve higher deductions for cross-border transactions internally in multinational companies than the opposite (reverse) income has been taxed. In this way, it is possible to ensure that multinational companies must compete on more equal terms with national companies.

 

Written by: 
Frian Aarsnes
Publication date: 
May 2017
ISBN: 
978-82-93212-74-4