The rise in aggressive tax planning and equally aggressive responses from governments the world over was top of the agenda at a conference in Copenhagen last week.
The joint American Bar Association and International Fiscal Association event focused on tax planning strategies in the US and Europe and covered a wide variety of topics such as cross border financing, migrating corporations across borders and distressed asset sales and loss utilisation.
A lively government roundtable saw representatives from tax authorities around the world discuss developments in their domestic and international tax systems.
In Denmark, top of the agenda is exchange of information and corporate anti-avoidance rules according to Peter Loft of the Skatteministeriet in Copenhagen. He faced an awkward question from an audience member about the decision to end tax treaties with France and Spain, but would not be drawn into giving an answer as to why the decision was taken or what was being done to reinstate the agreements.
Dave Hartnett, permanent secretary for tax at HM Revenue and Customs in the UK spoke about the controlled foreign company negotiations that are going on at the moment.
"We want to be more business friendly and effective," he said.
Hartnett also mentioned the discussions underway with the US and one other country about how to conduct joint audits, an idea that was not met by much enthusiasm from taxpayers in the audience.
A more positive statement related to the fact that Hartnett expects to see the corporate tax rate fall in the next five years.
"I know the government intends to [lower the rate]," he said.
In the US the codification of the economic substance doctrine was a point of discussion. With acting tax legislative counsel at Department of the Treasury, Joshua Odintz assuring listeners that the law on the substance of the doctrine had not changed and hinting that an angel list of transaction that do or do not conform to the doctrine is unlikely to be provided.
Exchange of information was a difficult point for the Swiss Confederation representative, Eric Hess. He stressed that exchange of information would only ever happen on request, never automatically and that banking secrecy was to remain intact in the country. Although he also revealed that the country is working hard to get new treaties signed, one with Turkey is expected to be concluded later this month.
The complete overhaul of the Liechtenstein tax system spurred interest in the conference room, with head of the Fiscal Authority Marco Felder talking about how the new system is being built.
"We will introduce a national interest deduction like in Belgium and are looking to the Netherlands innovation box [as a possibility]," said Felder, demonstrating how the principality is looking to other countries for inspiration.
A workshop discussing R&D investments stirred up some interesting points from the panellists who pointed out that in countries such as Sweden where there is no significant R&D tax credit system, the R&D market is still flourishing, proving that business decisions on where to locate these activities is not based purely on tax.
Another speaker disagreed, using the generous French tax incentive scheme as an example of several large companies making clear use of these credits when deciding where to conduct R&D.
In a panel looking at problems arising in relation to transfer pricing, panellists focused on several key areas, such as ways to minimise risk, the increasingly popular requirement by governments that companies prove the received a benefit from services referred to in transfer pricing strategies, problems with joint ventures and a trend of rising friction with indirect tax, in particular customs valuation similarities.
"Minimising normal tax risks is about being a bit conservative," said an in-house tax professional on the panel. "Transfer pricing risk is different as it involves two tax authorities with the taxpayer stuck in the middle. Being conservative in the eyes of one tax authority often means being controversial in respect of the other."
Other participant stressed that staying away from "funky set ups and fancy methods," was the name of the game for his large financial services company. "Solid policies are the best thing to have in place," he added.
