US urges countries to suspend digital taxes

Washington – US Treasury Secretary Steven Mnuchin is urging countries like France to suspend taxes on global computing giants such as Google and Amazon and wait for a negotiated agreement on international taxation, according to a letter released Wednesday.

As the United States is poised to impose tariffs of up to 100 percent on $2.4 billion in French products over that country’s digital services tax, Mnuchin said talks in the Organization for Economic Cooperation and Development are key to resolving the issue.

“We believe that it is very important that these talks reach agreement in order to prevent the proliferation of unilateral measures, like digital services taxes, which threaten the longstanding multilateral consensus on international taxation,” Mnuchin said in a letter to OECD chief Jose Angel Gurria.


“We urge all countries to suspend digital services tax initiatives in order to allow the OECD to successfully reach a multilateral agreement,” he said in the letter, which was dated Tuesday.

US Trade Representative Robert Lighthizer on Monday released a report slamming France’s tax as discriminatory and designed to target American tech giants like Google, Apple, Facebook and Amazon.


He said Washington would proceed quickly with plans to impose tariffs on French products, including champagne, cosmetics, yogurt and Roquefort cheese.

The decision “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” Lighthizer said in a statement on Monday.

The French tax imposes a three percent levy on the revenues earned by technology firms in France, which often come from online advertising and other digital services.


It targets revenue instead of profits, which are often reported by tech giants in low-tax jurisdictions like Ireland or Luxembourg in a practice that has enraged governments.

Lighthizer’s office said it is considering widening the investigation to look into similar taxes in Austria, Italy and Turkey.

Mnuchin said there is “broad support” for providing greater certainty on taxation.

“We look forward to working with the OECD along these lines, building on the work already done.”

A top EU official expressed concern this week that President Donald Trump’s administration was planning to pull out of the multilateral talks, so Mnuchin’s support for the talks come as a relief.

Cedric O, France’s secretary of state for the digital economy, also told AFP in Washington on Tuesday that France believed there was still time to stave off the threatened of tariffs.

“The first and foremost objective that we have is to strike a deal at the OECD,” he said, insisting that the current row was “not the end of the story.”

source: philstar.com

Trump’s tariffs prompting some US fund managers to look overseas

NEW YORK – President Donald Trump’s announcement of import tariffs, and the prospect of retaliation by other countries, is prompting some fund managers to pare their holdings of US stocks and look for opportunities overseas.

The high turnover of key staff in the White House, including the exit of Gary Cohn, the director of the National Economic Council this week is undermining confidence in policy making also.

President Trump said Thursday that he would begin imposing import tariffs of 25 percent on steel and 10 percent on aluminum in 15 days, sparking fears of a global trade war.

Gary Cohn, the chief economic adviser to Trump, who argued against trade protectionism, resigned late Tuesday after
Trump first announced the tariff plan and his successor has yet to be named.

Fund managers from Oppenheimer, Federated, and Wells Fargo are among those that now see international and emerging market equities as more attractive than the US, where the prospect of higher interest rates contributed to a slump in stocks in February, leaving the benchmark S&P 500 stock index up about 2.0 percent for the year-to-date, after turning in a 7.0 percent gain in January.


Overseas stocks, by comparison, are benefiting from synchronized economic growth in both Europe, Asia and the Americas, but offer lower valuations.

The gross domestic product of countries in the eurozone, for example, expanded at a 2.7 percent annual rate in the fourth quarter, outpacing the 2.5 percent gain in the U.S. economy over the same time. The Stoxx 600, an index of companies in the eurozone, trades at a trailing price to earnings ratio of 14.9, compared with a 22.7 P/E ratio for the S&P 500, according to Thomson Reuters data.

“You’re still seeing an earlier stage of an expansion cycle overseas versus the United States, which is likely to bounce between expansion and slowdown in the year ahead,” said Brian Levitt, senior investment strategist at OppenheimerFunds.

Emerging markets such as China and Russia also look attractive given their prospects for economic growth and low equity valuations, he said.

In the US, meanwhile, a Democratic party takeover of at least one branch of Congress in elections in November would bring more stability to Washington by curbing President Trump’s ability to expand protectionist policies, he said.

“History suggests markets do better with divided government because there is less uncertainty with policy because it becomes harder to get anything enacted,” he said.

WHY TARIFFS HURT

The prospect of import tariffs could damage the U.S. economy by raising costs for US. manufacturers and consumers, while prompting its trading partners to impose their own levies on U.S. exporters, increasing their costs also and sapping overseas demand.

Daniel Pinto, a co-president at JPMorgan Chase & Co, said in an interview with Bloomberg on Thursday that the US equities could fall by between 20 and 40 percent over the next three years if a global trade war breaks out.

Brian Jacobsen, multi-asset strategist at Wells Fargo Asset Management, said that the risks of retaliatory tariffs is prompting him to add to emerging markets and international stocks but at a slow pace, despite the fact that they look more attractive on a fundamental basis.

“Strategically, we still really like international and emerging markets, but when you have asymmetric risks, that makes us a little cautious on non-U.S. assets for now”, given that markets have not yet priced in the possibility of more protectionist policies, he said.

Overall, US fund managers have been reducing their stake in domestic stocks as interest rates rise, making bonds more attractive.

US balanced funds, which hold both equities and bonds, now have an average of 55 percent of their assets in stocks, a 4.0 percent decline from 2014, and nearly 41 percent of their assets in bonds, according to Lipper data.

Yet Ashwin Alankar, head of global asset allocation at Janus Henderson Investors, said that he remains a fan of large-capitalization US stocks despite the likelihood of higher trade costs and inflation.

The recently-passed US corporate tax cuts provide on-going fiscal stimulus that should balance out higher interest rates, he said, a boost to stock prices that is not found in other markets.

As a result, he is moving more of his portfolio in large-cap US stocks, he said.

“Europe isn’t talking about fiscal spending, Japan isn’t,” he said. “The US is the only market in the world right now that could have the tailwind of fiscal spending.”

source: interaksyon.com

Trump's 1995 tax records suggest no federal taxes for years: New York Times

NEW YORK - Republican presidential nominee Donald Trump declared a $916-million loss on his 1995 income tax returns and the large tax deduction may have allowed him to avoid paying federal income taxes for up to 18 years, the New York Times reported on Saturday.

The Trump campaign, in a statement responding to the Times report, said that the tax document was obtained illegally and that the New York Times is operating as an extension of the presidential campaign of Democratic rival Hillary Clinton.

The Times said it had obtained Trump's 1995 tax records and that they showed he received the large tax benefits from financial deals that went bad in the early 1990s.

The newspaper quoted tax experts it hired to analyze Trump's records as saying that tax rules which are especially advantageous to wealthy filers would have let Trump use his $916-million loss to cancel out an equivalent amount of taxable income over an 18-year period.

The Times said that although Trump's taxable income in subsequent years is as yet unknown, a $916-million loss in 1995 would have been large enough to wipe out more than $50 million a year in taxable income over 18 years.

Trump has declined to release his tax records, unlike previous presidential nominees in modern history, saying his taxes are under a federal audit. Experts say he could still release them publicly if he wished.

"Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required," the Trump campaign statement said.

"That being said, Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes, along with very substantial charitable contributions," it said.

source: interaksyon.com

Big US firms, led by Apple, hold $2.1 trillion overseas to avoid taxes: study

WASHINGTON - The 500 largest American companies hold more than $2.1 trillion in accumulated profits offshore to avoid US taxes and would collectively owe an estimated $620 billion in US taxes if they repatriated the funds, according to a study released on Tuesday.

The study, by two left-leaning non-profit groups, found that nearly three-quarters of the firms on the Fortune 500 list of biggest American companies by gross revenue operate tax haven subsidiaries in countries like Bermuda, Ireland, Luxembourg and the Netherlands.

The Center for Tax Justice and the US Public Interest Research Group Education Fund used the companies' own financial filings with the Securities and Exchange Commission to reach their conclusions.

Technology firm Apple was holding $181.1 billion offshore, more than any other US company, and would owe an estimated $59.2 billion in US taxes if it tried to bring the money back to the United States from its three overseas tax havens, the study said.

The conglomerate General Electric has booked $119 billion offshore in 18 tax havens, software firm Microsoft holding $108.3 billion in five tax haven subsidiaries and drug company Pfizer is holding $74 billion in 151 subsidiaries, the study said.

"At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014," the study said. "All told these 358 companies maintain at least 7,622 tax haven subsidiaries."

Fortune 500 companies hold more than $2.1 trillion in accumulated profits offshore to avoid taxes, with just 30 of the firms accounting for $1.4 trillion of that amount, or 65 percent, the study found.

Fifty-seven of the companies disclosed that they would expect to pay a combined $184.4 billion in additional US taxes if their profits were not held offshore. Their filings indicated they were paying about 6 percent in taxes overseas, compared to a 35 percent US corporate tax rate, it said.

"Congress can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets," the study concluded.

source: interaksyon.com

What Is Marginal Tax Rate and How Does It Work?

We hear a lot about tax rates. Often, what we pay in taxes is expressed as a percentage of income. However, it’s important to understand that the tax rate you pay doesn’t apply to your entire income. Instead, you will pay taxes based on a formula that looks at was is called the marginal tax rate.

What is Your Marginal Tax Rate?

Your marginal tax rate is the tax you pay on your last dollar of income. However, and more importantly for tax planning, your marginal tax rate is also what you’ll likely pay on your next dollar earned.

Since Canada operates on tax brackets, you will pay more tax when you earn more. However, it’s worth noting that you pay a rate based on the income in each bracket. So your marginal tax rate doesn’t reflect the total that you pay on your income. In fact, what you actually end up paying, in terms of a percentage of your income, is probably going to be lower than your marginal tax rate.

Even with the reality that your taxes will go up the more you earn, it’s possible to use the marginal tax rate to your advantage by planning ahead with RRSPs and other steps to reduce your taxes. Marginal tax rate should not be confused with your average tax rate, which is simply the amount of tax you pay divided by your income.

How Does Marginal Tax Rate Work?

To show how these tax rates work, I’m using the combined federal and Alberta rates for 2015. While your province may have different tax brackets and tax rates, Alberta has a flat provincial tax of 10%, and this will give you an idea of how marginal tax rates work. For the tax rates in your province, you can find all marginal tax rates at TaxTips.ca.

Technically the first tax bracket is $0 to $44,701, but I’ve included the effect on marginal tax rate from the federal basic personal amount of $11,327 and the Alberta basic personal amount of $18,214.

• Up to $11,327 – tax rate of 0%
• $11,327 to $18,214 – tax rate of 15%
• $18,214 to $44,701 – tax rate of 25%
• $44,701 to $89,401 – tax rate of 32%
• $89,401 to $138,586 – tax rate of 36%
• above $138,586 – tax rate of 39%
•  

So if you lived in Alberta and made $44,000, your marginal tax rate would be 25%. But what if you were to get a $5,000 raise? Then you would be in the next tax bracket and paying 32% on that final $4,299. So, as you can see, you aren’t paying the entire 32% on all of your income. You pay the percentage reflected in each bracket, so the first $11,327 isn’t taxed at all. That immediately brings down your effective tax rate. Additionally, as you can see, you only pay the 32% on any income that takes you above the threshold. In this case, you are making $49,000 a year after your raise, but you aren’t paying 32% in taxes on that entire amount.

Knowing this is how you can best work towards reducing your taxes.

Investing In RRSPs Based On Marginal Tax Rate

Sticking with the example above, it might make sense to put the $4,299 into an RRSP since you would get $1,376 back on your tax refund. However, putting any more into an RRSP that year may not be best since you would only get 25% back, not 32%. While getting a 25% tax deduction might sound better than nothing, you need to look at what you expect to earn in retirement. Tax planning requires that you step back and look to the future. Now, if you have more money to save, this is where your TFSA can come in. Make use of your RRSP within your highest tax bracket, but also look to use your TFSAs contribution room as well.

While you would be making $49,000 a year in this example, and will likely make more in future years, you would likely need less money in retirement. With the house paid off, children moved out, and since you no longer need to put money money away for retirement, you may be able to withdraw less than $44,701 (or its equivalent whenever your retire). This is when an RRSP works best, when you can get a a larger tax deduction from contributing and then pay a lower income tax in retirement. It’s important to understand this, since the money you withdraw from your RRSP is considered “regular” income.

Knowing and understanding your marginal tax rate, and how it works, is a key part of long-term financial and tax planning. Take the time to understand, and you will be able to get the most from your RRSP, now and in retirement.

source: canadianfinanceblog.com

Thousands of Hungarians protest against tax on Internet traffic

BUDAPEST — Thousands of Hungarians protested in Budapest on Sunday against a planned new tax on Internet data transfers, which they said would not only increase the tax burden but would also curb fundamental democratic rights and freedoms.

Prime Minister Viktor Orban’s government, which has been widely accused of adopting anti-democratic policies, first unveiled plans for the new tax late on Tuesday in the draft 2015 tax bill submitted to parliament.

The draft tax bill contains a provision for Internet providers to pay a tax of 150 forints (0.38 pounds) per gigabyte of data traffic, though it would also let companies offset corporate income tax against the new levy.

The rally on Sunday was organised by a Facebook group which has over 210,000 supporters. The protesters, which some local websites estimated as numbering over 10,000, gathered in front of the Economy Ministry.

“The move… follows a wave of alarming anti-democratic measures by Orban that is pushing Hungary even further adrift from Europe,” the organisers of “100,000 against the Internet tax” said in a press release.

“The measure would impede equal access to the Internet, deepening the digital divide between Hungary’s lower economic groups, and limiting Internet access for cash-poor schools and universities,” they added.

At one point, protesters held up their mobile phones, lighting up the square in front of the ministry. Then they walked to the city’s historic Heroes Square. Some of them also went to the nearby headquarters of the ruling Fidesz party and threw outdated computer parts at the building, breaking some windows, local Internet website Index.hu reported.

The organisers gave the government 48 hours to withdraw the tax legislation and said there would be a fresh protest on Tuesday if this does not happen.

Fidesz said in a statement on Sunday that on Monday it would submit an amendment to the legislation in parliament, which would set a maximum level on the tax payable by individuals. It said monthly payments would be capped at 700 forints, and Internet providers would pay the tax.

But some protesters said the new tax was an epitome of the government’s mistaken economic policies.

“This would be a double tax on us, as I have already paid a sky-high VAT when I bought the gadgets, computer and router,” said Attila Sos, 43, who came to the protest with his family.

“This is a good occasion for a lot of people to come here to show that they are discontent with the government’s tax and economic policies. This was only the icing on the cake.”

“The Internet connects people and it should not be limited,” said Krisztina Nagy, 21, who wants to be a Web programmer, and fears that companies would push the costs of the new tax onto customers.

Orban’s government has in recent years imposed special taxes on the banking, retail and energy sectors as well as on telecommunications providers to keep the budget deficit in check, jeopardising profits in some sectors of the economy and unnerving international investors.

At the same time, it has cut personal income taxes.

The Association of IT, Telecommunications and Electronics Companies has said the tax would force them to raise prices.

source: interaksyon.com

India seeks possible US tax violations as row over diplomat's arrest worsens

NEW DELHI -- India has sought details about staff in American schools in the country for possible tax violations and revoked ID cards of US consular officials and their families, retaliatory steps for the arrest of an Indian diplomat in New York.

The measures suggest that the two countries are no closer to a resolution of a diplomatic dispute over the treatment of Deputy Consul General Devyani Khobragade this month on charges of visa fraud and underpayment of her housekeeper.

Khobragade, who has denied the charges, was handcuffed and strip-searched while in custody, sparking outrage in India.

An Indian government official said on Friday that New Delhi had asked the US embassy to provide details about people working in American schools and other US government facilities to determine if they had permission to do so and if they were paying taxes that are mandatory under Indian law.

Diplomats' spouses who take up work in schools or other embassy facilities are supposed to inform the host country.

Violations of this kind had often been ignored, but now India would not turn a blind eye, the official said, speaking on condition of anonymity.

The US embassy declined to comment on the latest steps.

India had also withdrawn some privileges that US diplomats and their families enjoy and would treat them as Indian officials are treated in the United States, the Indian official said.

US Ambassador Nancy Powell has been refused special privileges at New Delhi airport.

"We have said all access is on a reciprocal basis," the government official said. "She is not going to get the benefits that the Indian ambassador in the US doesn't get."

US consular officials and their families have been asked to surrender identity cards that gave them a degree of immunity. Under a new regime, consular officials -- but not their families -- will be given identity cards with fewer privileges.

"Spouses and children have no more immunity. So if there is a parking offence or ... something else happening in Bangalore etcetera, they would be held liable," the Indian official said.

Khobragade was released in New York on $250,000 bail after giving up her passport and pleading not guilty to visa fraud and making false statements about how much she paid her Indian housekeeper. She faces a maximum of 15 years in prison if convicted on both counts.

US Secretary of State John Kerry expressed regret over the case in a phone call to India's national security adviser last week, but India is still demanding that the charges be dropped and that the United States apologize. US prosecutors have defended the investigation against Khobragade and her treatment. Before this diplomatic blowup, US-Indian relations were seen as cordial and improving.

UN accreditation

In a new twist, India now argues that Khobragade was accredited to the United Nations at the time of her detention, giving her immunity from arrest.

She was temporarily moved to India's UN mission in August to help with the workload ahead of the General Assembly session and a visit by the prime minister. A copy of her accreditation, made available to Reuters, lists her as an adviser for a period from August 26 until December 31.

"At no stage we were told by the US side what was going on. We were kept in the dark. A lot of these things could have come out had we been informed then," the official said, explaining that India had not been warned she might be arrested.

According to the UN Manual of Protocol website (www.un.int/protocol/3_6.html), UN accreditation alone does not appear to grant diplomatic immunity, it simply gives Khobragade access to UN headquarters in New York.

The manual says a country's UN ambassador must write to the UN secretary-general to request privileges and immunities for individual diplomats. The United Nations then submits this to the US mission to the United Nations for approval.

Separately, India did ask the United Nations earlier this month for Khobragade to be officially registered as a member of the country's UN mission in the hope she would be granted more sweeping immunity than she was entitled to as India's deputy consul general in New York.

That request has been approved by the United Nations, a UN source said on Monday. A State Department official confirmed that the United States had received paperwork from the United Nations and was reviewing the application.

source: interaksyon.com

Donations tax-free, but BIR asks aid givers to touch base with NDRRMC, DSWD-accredited agencies

MANILA – No tax or duty is being imposed on donations coming in for areas hit by super typhoon Yolanda, but the Bureau of Internal Revenue is advising all donors to coordinate with the National Disaster Risk Reduction Management Council (NDRRMC) or the Department of Social Welfare and Development (DSWD) to ensure the tax-free status, allow the government to track and acknowledge all donations, and guarantee they go only to victims.

BIR chief Kim Jacinto-Henares made this clear Thursday as a flood of donations from at least 36 countries and international organizations led by the UN have come in the past several days, along with spontaneous acts of mercy by private volunteer groups, companies and concerned Filipinos from abroad.

The government, said Henares, will shoulder the 12-percent value-added tax by way of a tax expenditure, so it’s important, especially for major donor initiatives, to coordinate with the relief agencies accredited with DSWD or the NDRRMC.

“Please coordinate with DSWD about the VAT because they have a mechanism to address that… The donation to NDRRMC is also duty exempt; if there’s going to be any VAT, it’s going to be supported via the GAA, it’s going to be paid for by the national government via tax expenditure fund.”

She added, “There’s really no tax because it’s going to be shouldered by the government by budget support by as long as the donation is made to NDRRMC. Now, for donations made to accredited relief agencies of DSWD…It’s the same—it’s duty exempt . . .They should coordinate with DSWD so the VAT can properly be answered for.”

Asked if government is keeping track of the donations, she replied, “yes, that’s why they have to go through customs. We keep track of it and make sure it’s a legitimate donation. Unfortunately, there are some people . . . I mean, as far as we are concerned, everyone is in the mode of helping people but unfortunately, as you can see from experience in Tacloban, there are people who take advantage of the misery of other people."

Smugglers, keep out

Henares added: "So what we want to do is provide assistance to those who need it and really give the benefit [tax breaks] of all these things to those people who are really helping, and not to the people who are lawless like smugglers. Because we know there are people who will take advantage of it. Although that should be our real concern at this time, but…. although everyone is paying attention to the people affected directly, if we [BIR, finance agencies] do not also manage this, it will affect the other farmers, other entities [that] need protection from the government."

She said "The system has to be put in place and customs people and DOF people have put a one-stop shop in the ports where DSWD and NDRRMC are. From what I understand we have been doing this every time. It’s been going on smoothly as far as DSWD is concerned. Of course, there are some people who encounter difficulty because they have never done this. Some people who will just suddenly bring in things without coordinating with others, [and of course, problems are bound to arise]. They should coordinate with DSWD and NDRRMC.

Considering this is the biggest logistical and humanitarian challenge for disaster-prone Philippines, Henares said the avalanche of aid is understandable. This is why, she stressed, all those who help should be acknowledged and their task facilitated. “We have to keep track and eventually say thank you. We have to acknowledge aid coming in. If we don’t keep track, how do we acknowledge; when people say they provided aid, we want to say show them it really went to people. So we want to keep track to make sure aid being brought to us is not wasted.”

source: interaksyon.com

New Aussie PM Abbott moves to repeal climate tax

SYDNEY -- Australia's new conservative Prime Minister Tony Abbott Wednesday moved to abolish a carbon tax designed to combat climate change as his first major economic reform since taking office.

Abbott said the September 7 election that he won decisively had been a referendum on the future of the tax, which was imposed by the former Labor government on major polluters from 2012 in a bid to reduce carbon emissions.

"No one should be in any doubt -- the government is repealing the carbon tax in full," he said as he introduced a bill to repeal the tax into parliament. "We are doing what we were elected to do. We have said what we mean and we will do what we say -- the carbon tax goes. It goes."

Scrapping the divisive tax was a central election promise of Abbott who had argued the cost of the levy was passed on to consumers, resulting in higher utility bills and day-to-day costs.

"The intention of the new government is to put power prices down by axing this toxic tax and by using other means to reduce emissions," he said.

"This is our bill to reduce your bills, to reduce the bills of the people of Australia."

Abbott also said the removal of the tax would strengthen the economy of Australia, which is among the world's worst per capita polluters due to its reliance on coal-fired power and mining exports.

The carbon tax had charged the country's biggest polluters for their emissions at a fixed price and was due to transition to an emissions trading scheme.

The new government instead favors a "direct action" plan that includes an incentive fund to pay companies to increase their energy efficiency, a controversial sequestration of carbon in soil scheme, and the planting 20 million trees.

Abbott had earlier been forced to wait for about an hour to move the legislation after Labor, which opposes the dismantling of the tax, stalled proceedings with debate about the government's nickname for opposition leader Bill Shorten.

The prime minister had referred to his opposition counterpart as "Electricity" Bill Shorten during a media interview earlier in the day, a moniker attacked by Labor as "name-calling."

Then as he began to move the bill, Abbott was interrupted by yelling protesters in the public gallery.

"Inaction (on climate) is simply not good enough," shouted one protester, one of more than a dozen removed from the chamber.

The government also introduced a bill to repeal the mining tax -- a levy once proposed as a 40 percent tax on "super profits" within the industry but which was ultimately greatly reduced in size and scope after a backlash from the mining sector.

source: interaksyon.com

US tax probe leaves Swiss bankers afraid to travel: report

GENEVA - As a United States hunt for tax evaders and their accomplices gains momentum, many Swiss bankers are afraid to go abroad for fear of arrest, one business leader said in an interview published Sunday.

"In my opinion, some 1,000 Swiss bankers no longer dare to go to the United States, or even travel abroad," Martin Naville, the head of the Swiss-American Chamber of Commerce, was quoted as saying by Le Matin Dimanche weekly.

Swiss banks and industry representatives are increasingly cautioning bankers who have worked with US clients to refrain from travelling outside Switzerland, the paper reported.

Swiss banks are believed to have accepted tens of billions of undeclared dollars from US citizens, though they now refuse such money, and a number of banks are under US investigation.

The US has not made public which individual bankers it is probing, but according to Le Matin Dimanche, about 30 names are on the list.

Recently however, "the United States has proven it can strike where and when it likes, and now with the help of European countries", the paper wrote, describing widespread paranoia throughout the banking industry.

The report comes just over a week after the arrest in Italy of a former high-ranking UBS executive alleged to have helped US customers conceal their assets.

Raoul Weil, the 54-year-old ex-chairman of UBS's global wealth management service, was indicted by a US federal grand jury in 2008 for his alleged role in overseeing the US cross-border business.

The indictment alleges that Weil and co-conspirators helped US customers hide around $20 billion (15 billion euros) in assets from tax authorities.

The Swiss national, who left UBS after the 2008 indictment, has always denied the charges and is reportedly fighting his extradition from Italy to the US.

The Swiss Bank Employees Association told Le Matin Dimanche it was advising all bankers who have regularly visited clients in the US "to abstain from travelling".

And some Geneva banks are urging employees living on the French side of the border to settle in Switzerland instead to avoid problems, one banker who wished to remain anonymous told the paper.

"I don't even dare leave Zurich anymore," said another unnamed banker, who recently found out his name had been handed to US authorities.

source: interaksyon.com

Lamborghini-driving Ayala Alabang resident sued for tax evasion

The Bureau of Internal Revenue (BIR) today sued a Lamborghini-driving resident of posh Ayala Alabang for tax evasion.

In a statement, the BIR said it filed criminal charges before the Department of Justice (DOJ) against Napoleon Segui Villapando "for willful attempt to evade or defeat" tax payments for the year 2007 -- a violation of Section 255 of the National Internal Revenue Code.

A resident of 301 San Juanico St in Ayala Alabang, Muntinlupa, Villapando bought from his employer, Norsophil Metal Resources Inc, a Lamborghini 2-door Coupe sports car worth P20 million in 2007. [See Lamborghini commemorates 50th year anniversary] This even though he declared a gross income of only P225,078.60 for that year, according to BIR records.


The bureau's investigators found that Villapando failed to file any income tax return for the years 1992-2002 and 2005, declaring a combined income of P718,575.78 in 2003-2004, 2006 and 2007.

The BIR said his income for those years were withheld and remitted by his employer, indicating that Villapando earned only compensation income and thus had no capacity to acquire the luxury sports car.

"Thus, his acquisition must have been made possible by income he earned from other sources aside from his compensation as an employee," the agency said.

Based on its computation, the BIR said Villapando failed to report P19.77 million in income, thus representing an under-declaration of 8,786 percent of income.

Under Section 248 of the Tax Code, under-declaration of taxable income by more than 30 percent constitutes a prima facie case of fraud tantamount to tax evasion.

According to the BIR, Villapando owed the government P15.84 million in taxes, inclusive of surcharges and interests.

This is the bureau's 165th case under the Run After Tax Evaders (RATE) Program filed under the leadership of Commissioner Kim Jacinto-Henares.

source: interaksyon.com

Lauryn Hill pays tax debt ahead of Monday sentencing, attorney says

NEWARK, New Jersey – Hip hop artist Lauryn Hill, on the eve of her scheduled sentencing on federal tax evasion charges, has paid off the balance of more than $900,000 she owed in back taxes and penalties, her attorney said on Sunday.

The Grammy-winning musician is scheduled for sentencing on Monday in U.S. District Court in Newark, New Jersey on three charges she failed to file tax returns on more than $1.8 million between 2005 and 2007.

She faces up to a year in jail for each charge, but the final sentence is expected to be adjusted based on her repayment of the money, her attorney said.

She owed at least $504,000 in federal back taxes as well as state taxes and penalties that brought the estimated total to more than $900,000.

“Ms Hill has not only now fully paid prior to sentencing her taxes, which are part of her criminal restitution, but she has additionally fully paid her federal and state personal taxes for the entire period under examination through 2009,” her attorney, Nathan Hochman, said in an email.

In April, Hill was admonished by U.S. Magistrate Judge Madeline Cox Arleo for failing to make promised payments on her unpaid taxes ahead of her sentencing.

She had expected to raise the money from a new recording contract last fall but only paid $50,000 when she did not complete the expected tracks, her attorney said.

Her attorney said last month that Hill lined up a loan secured by two pieces of real estate. He said on Sunday that the tax repayment came from a combination of sources but did not include funds from any new record sales.

A new single by Hill, her first in several years, called “Neurotic Society,” was posted on iTunes on Friday.

She posted a link to the song on the social media site Tumblr on Saturday, writing, “Here is a link to a piece that I was ‘required’ to release immediately, by virtue of the impending legal deadline.

“I love being able to reach people directly, but in an ideal scenario, I would not have to rush the release of new music… But the message is still there,” she wrote.

Hill’s 1998 solo album “The Miseducation of Lauryn Hill” won the singer, a former member of the Fugees, five Grammy awards.

Hill is from South Orange, New Jersey.

A spokeswoman for U.S. Attorney Paul Fishman declined to comment on the case, as did a spokesman for the Internal Revenue Service.

source: interaksyon.com

10 Ways to Use Your Tax Refund

In 2012, the average federal tax refund for Americans was $2,800. If you have a big family or a low income, your refund was likely even more than that. Even though you should know about what to expect with your refund, most of us treat it as a windfall. Choosing what to do with this big check may be the hardest financial choice you make all year.

A 2012 survey from the National Retail Federation showed that more Americans than ever were intent on saving their refunds. In fact, 43 percent planned to sock that check away, and about 40 percent planned to pay down debt with their 2012 check.



How will you use your tax refund this year? We’ve got a few ideas to consider:

1. Create an emergency fund

 

If you don’t have an emergency fund, your tax refund is a perfect place to start. Emergency fund recommendations range from $1,000 while you’re paying down debt to six months’ worth of income. Your check from the IRS may be nowhere near the upper end, but it could still be a good start on an emergency fund to help you through potentially rocky times in the next year or two.

2. Pay down debt

 

If you have an emergency fund (or access to cash or credit in an emergency) it’s probably time to focus on paying down debt. Since debt typically costs more than investments earn, now is a great time to pay down debt – especially higher-interest debts that are eating away at your monthly income and potentially lowering your credit score.

3. Buy a home

 

Depending on home prices in your area, your tax refund may be enough to cover a down payment – or at least a big chunk of it. With an FHA loan, you only need a 3.5 percent down payment (plus closing costs), so a $3,000 check could be enough to get an FHA loan on a small home in, for instance, the Midwest. Already have a home? Consider using your refund to buy a HUD home as an investment.

4. Fund a retirement account

 

If you haven’t started a retirement account – or if you just need to catch up on your savings – putting your tax check into a 401(k) or IRA is a great idea. The sooner you fund your retirement account, the more easily you’ll save for your eventual retirement.

5. Upgrade your furniture or appliances

 

If you’re wasting energy because of an inefficient washer-dryer set, or your couch is falling apart at the seams, you may want to use your refund check to buy new furniture or appliances. One advantage here is that you can often negotiate for a discount if you pay in cash – or you can buy lightly used furniture from Craigslist for a fraction of the retail price.

6. Renovate your home

 

Whether you’re getting ready to sell your home or you’re settling in for the long haul, your tax refund is a great way to start renovating. There are so many large and small ways to renovate, some of which can increase your home’s value. One Fox News article advises looking for ways to make your home more energy efficient, increase curb appeal, or improve the look of your kitchen or bathroom.

7. Go on vacation

 

You don’t have to spend a fortune to go on a nice vacation, and a relaxing trip can be the perfect way to rejuvenate yourself for new ventures in the rest of 2013. Whether you decide to backpack in Europe or enjoy a luxury cruise, you can use the web to save when booking your vacation so that your tax check stretches further.

8. Start a side venture

 

Whether you want to turn a hobby into a business or leverage your work experience as a side venture, earning a second income from another business is a great idea. You could start a blog, work as a consultant, or mow grass on summer weekends. Whatever your side venture, you’ll probably need a little capital to get started. Your tax refund is just the place to get it.

9. Take a class

 

Whether you want to enrich your life with a new hobby or knowledge or boost your employability, paying for a class with your tax refund is a great idea. In fact, you may be able to pay for an entire year’s worth of classes at a community college, if you want to work toward a new career field.

10. Give to charity

 

Donating to charity is a great way to boost your own sense of well-being. Plus, you can claim charitable giving on next year’s itemized taxes, so you could get an even better tax break next year.

These are just a few ideas for how to use your tax refund. Are you getting a check from the IRS this year? If so, how do you plan to use it?

source: doughroller.net

US online retailers under pressure with looming tax bill

WASHINGTON — The US Senate moved Monday toward expected approval of a bill that would subject online retailers to state sales taxes, cutting a advantage that helped them steal business from brick and mortar stores.

The bill, the Marketplace Fairness Act, represents a long fought battle by local governments and businesses to collect taxes on Internet sales to local people by outside retailers like Amazon, eBay, and other online giants.

But it also raises operating challenges for Internet businesses, especially medium-sized ones, to begin collecting tax payments for state and local jurisdictions, wherever orders originate.

Senators voted a generous 74-20 to move to debate on the bill, which suggests an easy passage, despite a stiff lobbying fight to block or alter it from online retailing power eBay.

The bill would force online retailers to collect sales taxes on purchases made in states and localities even if the retailer is not physically present there.

A 1992 Supreme Court ruling has prevented states from compelling tax collection as long as the retailer lacks a physical presence in the state.

With combined state and local sales taxes adding as much as 10 percent to the price of a good, that has given online sellers a significant advantage to local shops.

Local shops then want the bill, as do states and local governments trying to rebuild finances after the deep 2008 recession by seeking out new sources of income.

The National Retail Federation, which represents physical retailers, estimates that $24 billion worth of taxes goes uncollected due to online sales.

“It’s costing states and localities billions in lost revenue,” said Republican bill sponsor, Wyoming Senator Mike Enzi. “Now is the time for Congress to act.”

The bill would cover only retailers with more than $1 million in revenues from outside their physical base, an effort to alleviate the collection and filing burden collecting taxes from multiple jurisdictions would have on small businesses.

But the online giants Amazon and eBay have split over it. Amazon, which long fought local taxes, now has or will have a warehouses in so many areas that it backs the bill, if mainly to ensure its competitors do not have an advantage.

But eBay, the auction marketplace that is increasingly competing with amazon for direct sales of new consumer goods, over the weekend launched a broadside against the bill.

EBay chief executive John Donahoe told eBay members in an email that the bill threatened their business.

“Some lawmakers and large retailers want to impose more costs on you by mandating nationwide sales tax collection for your online business, whether you sell through eBay, other marketplaces or your own site,” Donahoe said.

The White House strongly endorsed the bill, saying it “will level the playing field for local small business retailers that are in competition every day with large out-of-state online companies.”

The influential anti-tax lobby Americans for Tax Reform issued a statement urging backers to fight the bill, saying it would extend the power of “money-hungry state legislators” to apply taxes outside their borders.

“The regulatory implications will span more than just internet based businesses.”

source: interaksyon.com

Debt servicing declines at end-February

MANILA - Taxpayers' money spent to settle the country's debt fell by more than a tenth in the first two months of the year, the Bureau of Treasury said on Monday.

Data from the bureau showed the national government having spent P174.34 billion at end-February on debt amortization and interest. This is 10.7 percent lower than the P195.14 billion spent in the same two-month period last year.

The drop in the government's overall debt servicing was in spite a 2.7 percent increase in interest payments to P72.26 billion this year from P70.85 billion last year. In contrast, the amount spent on paying down the principal debt dropped 18.2 percent to P101.58 billion this year from P124.29 billion in 2012.

In February alone, debt servicing climbed to P62.616 billion this year from P60.439 billion last year. Of the amount spent for debt servicing, P44.696 billion went to amortization and P17.92 billion to interest.

As of January, the government owed P5.334 trillion, or seven percent more than a year ago's P4.993 trillion.

The government incurs debt whenever its tax revenues fall short of its expenditures, creating what is called a budget deficit.

The Aquino administration earlier said it would limit its borrowings this year to the domestic market so it can tap into the country's excess liquidity and so borrow at lower rates.

Treasury rates have slumped to record lows on account of too much money in the local financial system. Treasury bill rates for example have slumped to below one percent.

source: interaksyon.com

Boracay, Puerto Galera resort projects bag tax perks from BOI

MANILA - Two projects in two of the country's most popular tourist destinations bagged tax and other perks from the Board of Investments (BOI).

In a statement, the BOI on Monday said it approved fiscal incentives for a P2-billion five-star resort hotel that Boracay Seascapes Resort Inc will put up in the world-class island resort. Called the Crimson Resort and Spa Boracay, the project qualified for incentives under the 2012 Investment Priorities Plan (IPP).



Boracay Seascapes Resport is a unit of FDC Hotel Corp, which in turn is a subsidiary of Filinvest Development Corp.

Crimson Resort and Spa Boracay will rise on a 2.9-hectare tract of land in Barangay Yapak. The resort hotel will have up to 200 guest rooms as well as banquet facilities, a chapel, food and beverage outlets, a game room, a gym, a kid’s club, a salon, a spa, a swimming pool and water sports facilities.

Groundbreaking for the resort hotel is scheduled within the first quarter of this year while commercial operations would start in December 2017. The project will generate 285 jobs.

The second project costing P419.3-million is called the Talipanan Infinity Paradise Resort, which the company of the same name will build in Talipanan, Poblacion, Puerto Galera, Oriental Mindoro.

The resort will have 70 rooms. Operations will begin in December, and 88 workers will be hired.

The BOI said these projects would help hit the government’s targets of over seven million tourism jobs and 10 million tourist arrivals by 2016 under the National Tourism Development Plan (NTDP).

Launched last year, NTDP calls for tourism investments worth P265 billion and the construction of more than 50,000 hotel and resort rooms between 2012 and 2016.

source: interaksyon.com

Cutting smoking saves more in health bills than lost tax: EU

RUSSELS - The cost and health benefits of getting people not to smoke and better still, not to start, more than outweigh the taxes the tobacco industry pays to governments, the European Commission said Monday.

Irish Health Minister James Reilly, presenting the EU's new draft tobacco law in the European parliament, said smokers paid some 20 billion euros ($26.4 billion) annually in tax but health costs associated with smoking came to 23 billion euros.

On top of that were another eight billion euros in lost production and other costs due to smokers' higher rates of sickness, leading to days off and lower efficiency.

It is a "no-brainer, ethically and economically," Reilly told parliament, dismissing out of hand the argument that tobacco is too important economically to be tampered with.

EU Health Commissioner Tonio Borg made the same point, noting that some 700,000 people die prematurely as a result of smoking each year -- equal to a city about the size of Frankfurt in Germany.

The new tobacco directive, which parliament and all 27 member states will have to approve, aims simply to save those lives, Borg said, adding that the legislation needed to be brought up to date as the industry introduces new products, especially those targeting the young.

"Tobacco should look and taste like tobacco," Borg said, holding up new products brightly colored and looking like lipstick or perfume so as to attract younger people.

Accordingly, the directive stipulates that 75 percent of a cigarette package must carry health warnings, and that certain "characterizing" flavors such as vanilla or menthol be banned.

"My aim is that when people look at a tobacco product they realize that it will damage their health," Borg said.

In January, thousands of tobacconists from across Europe marched on European Union headquarters to protest against the planned directive which will take about three years to come into effect once passed.

source: interaksyon.com

BIR slaps ‘It’s Showtime’ host Ryan Bang with P1.8M tax evasion charge

Comedian and TV host Ryan Bang was charged with tax evasion by the Bureau of Internal Revenue on Thursday.

In its complaint, the BIR alleged that the 21-year-old “It’s Showtime” host owes the government P1.8 million in income and percentage taxes for 2011 and 2012.

Bang, a Korean citizen whose real name is Bang Hyun Sung, has been an ABS-CBN talent since he joined the reality show “Pinoy Big Brother” in 2010.

The amount of P1.8 million, which includes surcharge and interest, was based on tax filings by companies that hired Bang over the two-year period during which he is said to have earned a minimum of P3.05 million.

Bang’s legal counsel, Atty. Joji Alonso, told the ABS-CBN news program “TV Patrol” that her client had yet to see a copy of the complaint, but he would fulfill his financial obligations to the Philippine government.

source: interaksyon.com

Makati extends works hours ahead of deadline for tax, business license payments

MANILA - Frontline offices of the Makati City government have extended work hours on weekdays and weekends to accommodate taxpayers before the January 20 deadline for tax payments and renewal of business licenses.

In a statement, Makati Mayor Jejomar Erwin S. Binay said business owners and real property taxpayers can come to City Hall on weekdays after 5 p.m. and on weekends for their transactions to avail of discounts and avoid penalties for late payments.

The mayor also announced that electronic realty tax payment centers in the barangays will be open on designated dates, during which property owners need only present their previous receipt to complete their transaction in four minutes.

Binay said Makati offers a 10 percent discount on realty taxes paid on an annual basis, and five percent for quarterly payments made during the first 20 days of the quarter.

The Business Permits Office and Real Property Tax Division of Makati, assisted by teams from the Office of the City Administrator, Urban Development Department, Miscellaneous Division and the barangays, will be open from 5:30-10 p.m. from Mondays-Fridays until January 18.

On weekends, the said offices will be open to serve clients from 8 a.m. to 8 p.m., specifically on January 12 and 13, and January 19 and 20.  The issuance of community tax certificates, barangay clearances, insurance and other transactions are being done at the new City Hall Parking Building along F. Zobel St. on weekdays and weekends.

Satellite tax payment centers will be open from 9 a.m. to 4 p.m. in the following barangays: Urdaneta, January 10; Magallanes, January 11 and 12; San Lorenzo, January 14; Bangkal and Pio del Pilar, January 15; Tejeros and San Antonio, January 16; Guadalupe Nuevo and East Rembo, January 17; and West Rembo, January 18.

Residents whose barangays are not yet included in the program may pay their taxes at the nearest available barangay tax payment center or at the second floor of the new building of the Makati City Hall.

Based on the Makati Revenue Code, annual realty tax payments made after March will be charged an eight percent penalty, while late quarterly payments will incur a penalty of two percent per month.

Penalties on late payments of business taxes include a 25 percent surcharge and a two percent penalty per month of delay until the amount due is fully settled.

source: interaksyon.com

6 Changes Coming to Social Security Next Year

Every year, about this time, we start looking to the coming year, and what changes will be coming for our finances. Many aspects of our finances are affected by the changes put into place each year. The IRS announces tax brackets, we learn about new contribution limits on tax-advantaged retirement accounts, and we find out about other benefits, including Social Security.

The coming year, 2013, promises to be interesting on a number of levels. Changes are coming in health care as some of the provisions of the Patient Protection and Affordable Care Act come into play, and as contribution limits — including those on IRAs for the first time in a few years — head higher. There are also quite a few changes coming to Social Security in 2013.

Here are some of the items that you can expect to be different, starting next year:

1. Payroll Tax Cut Means Higher FICA/Social Security Taxes

You probably don’t realize it, but you have been enjoying a tax break. For the last couple of years, there has been a payroll tax cut in place. Instead of paying 6.2% in FICA/Social Security taxes with your paycheck, you have been paying 4.2%. That is money that has been in your paycheck, but won’t be, starting in 2013. (Unless Congress does something about it, of course.)

2. Cost of Living Increase

An announcement of a cost of living increase, amounting to 1.7% has been made. The Social Security Administration makes these adjustments when it feels as though inflation is having an impact. On average, a Social Security check is expected to increase by $21 in 2013.

3. No More Paper Checks

Our society is moving toward a greater integration of technology when it comes to money. The government is on board as well, eliminating paper checks along with the rest of us. Starting on March 1, 2013, the U.S. Treasury will no longer mail checks. You need to arrange for direct deposit to your bank account, or you need to get a Direct Express Debit MasterCard. If you haven’t chosen an option by March, you will receive a pre-paid debit card.

4. Increased Amount of Income Subject to Tax

High earners don’t see their entire income subject to Social Security taxes. Instead, you are only taxed on a certain amount of your earnings. In 2012, earners only paid Social Security taxes on the first $110,100 of income. In 2013, that amount goes up to $113,700. That means that you will pay more in taxes, since a greater portion of your income will be taxed.

5. Higher Earnings Limit

One of the complications associated with receiving Social Security benefits goes along with working while collecting benefits. You are limited as to how much you can earn before you start seeing some of that money withheld from your Social Security payments. For 2013, you can earn up to $15,210 when you are under your full retirement age without penalty.

6. Bigger Maximum Possible Benefit

The longer you wait to collect Social Security, the better your monthly benefit. If you wait until your “full retirement age,” rather than collecting as soon as the government will let you, you can see a better benefit. For 2013, that maximum possible benefit increases to $2,533.

In many cases, these changes are relatively small. However, they add up over time. Be aware of the changes coming to Social Security and make your own adjustments to deal with them.

source: bargaineering.com