Download PDF - Wipfli

More documents

Recommendations

Info

USA Update continued should be entitled to unilateral relief for the US tax already paid. The issue was whether this relief was available given that the tax in question had actually been paid by BDE and not the UK subsidiaries. The Decision In allowing the appeal, the High Court was critical of the ‘common sense’ approach followed by the Special Commissioners on the basis that there was no principle allowing them to follow such an approach. The judge did not see how a ‘common sense’ view could allow the interpretation they had arrived at. The High Court was of the view that, following National Bank of Greece, the source of income was more material than the residency of the company. In determining this source, it took into account the locations of the operations giving rise to the profits and the other party to the arrangements, the law which they were expressed to be governed by, and the lex situs of the underlying assets. On this basis, the profits of BUK were held to be US in origin and this gave the US primary taxing rights. The High Court felt that, given that either state was entitled to tax the profits, had the UK taxed BUK before the US had taxed BDE (the opposite order of events on the facts) then the US would have had to give credit rather than the other way around. TSD Securities (USA) LLC v The Queen The Canadian Tax Court in the case of TSD Securities (USA) LLC v The Queen recently decided against the longstanding position of the Canada Revenue Agency that US LLCs are not entitled to protection of the Canada-UK tax treaty. The basis of this decision appears to have been that, although the LLC was not liable for tax in the US (which was necessary for residence on a strict interpretation of the text of the treaty); its members were subject to tax there. This case has significant ramifications for US LLCs with Canadian income which has previously been subject to withholding taxes and which may now be entitled to a refund. operation of this rule. Accordingly, taxpayers with LLCs in their existing Canada-US structures should carefully consider the implications of this case as it applies to those current arrangements and the manner in which the fifth protocol may apply. Treatment of LLCs in other Jurisdictions Some countries have announced that US residents who invest in their countries through US LLCs may derive tax treaty benefits. For example, on 31 March 2004 the Mexican Tax Administration Service published a rule allowing benefits of the Mexico-US Tax Treaty to US members of US LLCs. The rule does not extend to Mexican residents investing in a US LLC. On 29 March 2004, the German tax authorities published a letter memorandum on classification of US LLCs. In essence, the classification approach of German tax authorities is very much like the US entity classification rules before their revision in 2006 (elect-the-box regulations). For more information please contact: Harold Adrion EisnerAmperLLP T: +1 212 891 4082 E: Harold.Adrion@eisneramper.com Or Jon Hills Partner - Tax services PKF(UK)LLP Accountants and business advisers T: +44 (0) 20 7065 0000 E: jon.hills@uk.pkf.com W: www.pkf.co.uk While the fifth protocol to the treaty includes a provision that is intended to allow treaty benefits to be claimed on income earned by a US resident through an LLC, significant uncertainties remain regarding the interpretation and 53 // PKF International Tax Alert All Regions Issue 8 November 2011
IMPORTANT DISCLAIMER: This publication has been distributed on the express terms and understanding that the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms PKF International Ltd Farringdon Place 20 Farringdon Road London EC1M 3AP Tel: 020 7065 0104 Fax: 020 7065 0194 www.pkf.com November 2011
Page 1 and 2:
International Tax Alert Issue eight
Page 3 and 4: Malaysia 26 Lee Yiing Ting summaris
Page 5 and 6: Austria Update Publication of finan
Page 7 and 8: Australia Update continued the exis
Page 9 and 10: Australia Update continued Under th
Page 11 and 12: Canada Update New Canadian treaty-b
Page 13 and 14: Canada Update continued ■ ■ ■
Page 15 and 16: Cyprus Update Tax treaty update Cyp
Page 17 and 18: Ghana Update Highlights of the tax
Page 19 and 20: India Update An introduction to Tra
Page 21 and 22: Ireland Update Domestic Tax Changes
Page 23 and 24: Kenya Update continued at 0%. This
Page 25 and 26: Lebanon Update continued free zones
Page 27 and 28: Malaysia Update Below is a summary
Page 29 and 30: The Netherlands Update This article
Page 31 and 32: The Netherlands Update continued 8
Page 33 and 34: Pakistan Update continued Federal E
Page 35 and 36: Romania Update There have been some
Page 37 and 38: Slovak Update Impact on income tax
Page 39 and 40: Slovenia Update Tax changes in 2011
Page 41 and 42: South Africa Update continued ■ a
Page 43 and 44: Spain Update There have been severa
Page 45 and 46: Uganda Update Introduction of Trans
Page 47 and 48: United Kingdom Update Changes propo
Page 49 and 50: USA Update Update on Reporting of S
Page 51 and 52: USA Update continued of any asset,
Page 53: USA Update continued LLC to be tran
show all

Download PDF - Wipfli

Create successful ePaper yourself

Delete template?

Save as template?