Taxation Essay Example For Students

Taxation Essay The accelerating growth in global trade has occasioned the creation of new types of cooperative enterprises. For example, companies routinely form joint ventures or other partnership arrangements to engage in isolated projects or systematically to conduct business. Various forms of limited liability companies are also business and investment vehicles in the global arena. The application of treaties to these companies and vehicles gives rise to problems because tax treaties do not deal with attribution of income they only allocate items of income between the two treaty countries. To the extent a treaty allocates income to the residence country of the company or individual earning or receiving the income, the determination to whom this income is taxed (that is, which company or individual is considered to earn or receive the income), is made under the domestic law rules of each of the treaty states. If these rules differ in their application in a given case, conflicting attribution wi ll result. 3 These treaty application problems have always existed but have been exacerbated in recent years by the growth of elective entity classification in some countries. For example, under U.S. law an entity, whether foreign or domestic, in many cases is free to choose whether it will be treated as transparent or nontransparent for U.S. tax purposes. /1/ Consequently, an entity may be treated as transparent for U.S. tax purposes and as nontransparent for foreign tax purposes, or vice versa. Also, without such elective classification, inconsistencies result from different domestic entity classification rules. For purposes of discussion, an entity that is treated as transparent for tax purposes in one jurisdiction and as nontransparent in another is referred to as a hybrid entity. /2/ When there is no classification conflict, a transparent entity may be referred to as a partnership for purposes of discussion. 4 The problems resulting from a characterization difference between th e two (and perhaps three) countries involved are threefold. In the first place, if the entity and the persons participating in the entity (participants) are residents of different countries, it is possible that each of the two countries taxes the income to its resident(s), typically without any relief for the tax imposed by the other country (except perhaps to the extent it was sourced in the other country). Second, if the source country taxes the income to the participants, but the residence country of the entity and of the participants taxes the income to the entity (or vice versa), the individual income tax rate applied may be substantially higher than the corporate tax rate to which the entity is subject with respect to the income in its country of residence (again, or vice versa). Third, particularly if the residence country of the recipient of the income relieves double taxation through a foreign tax credit, if the source country taxes the entity for the income, and the reside nce country of the participants taxes these participants, the latter country may not grant double taxation relief because the foreign tax was not imposed on the participant but on the entity. I. Article 4(1)(d) of 1996 U.S. Model and IRC Section894(c) Regulations 5 While the current OECD model tax treaty does not contain provisions to deal effectively with these issues, the 1996 U.S. model provides a solution, at least to the first of the issues mentioned above. This solution is provided through an addition to the OECD definition in article 4 of the term resident. With respect to the residence of partnerships and partners, article 4(1)(d) of the 1996 U.S. model income tax treaty provides as follows: An item of income, profit or gain derived through an entity thatis fiscally transparent under the laws of either ContractingState shall be considered to be derived by a resident of a Stateto the extent that the item is treated for purposes of thetaxation law of such Contracting State as the income, profit orgain of a resident. 6 This provision is not easily understandable. It does not matter under the law of which of the two treaty states the entity that receives the income is organized, or whether it is organized under the law of a third state. The only thing that matters is that if one of the two treaty states considers the receiving entity to be transparent, the treaty applies if the income under consideration is taxed to a resident of either state (that resident being the entity itself or the participants in that entity). 7 The formulation accommodates a series of different structures. For example, if the source of income is in one treaty state that treats the entity (which is a resident of a third state) as the recipient of the income, but the participants residence state taxes the income to the participants, the provision effectively requires the source state to treat the participants as the recipients of the income although under its own domestic law the sou rce state may treat the entity as the recipient of the income. 8 The U.S. model treaty article discusses a series of triangular cases and considers first what the outcome is under the current OECD model treaty. Next, with respect to each case, the article focuses on the impact of the special U.S. model treaty provision on residence of partnerships and partners (article 4(1)(d)). This discussion will not consider the approach taken in the OECD Report on the Application of the OECD Model Convention on Partnerships, issued August 16, 1999. (For prior coverage, see Tax Notes Intl, Aug. 16, 1999, p. 623, 1999 WTD 157-2, or Doc 1999-27066 (3 original pages). This report will be the subject of a later article. 9 Before discussing the cases in section 3 of this article, we will briefly examine the origin of this U.S. treaty provision: the regulations promulgated in 1996 under IRC section 894(c). The approach taken in U.S. model treaty article 4(1)(d) is consistent with the approach taken in the regulations under IRC section 894(c). Essentially, the latter provisions deny any reduced treaty withholding rate to an item of income derived by a nonresident company or individual through a U.S. or foreign (treaty country or third country) partnership or other fiscally transparent entity if (i) the residence country of the company or individual deriving the income does not include the item in the income of a resident entity itself or of a resident participant of that entity; (ii) the treaty does not address the applicability of the treaty to income derived through a partnership; and (iii) the foreign country does not impose tax on a distribution of such item from the partnership to a partner. /3/ .u7238dfbec6f87f4a958d2788d950287b , .u7238dfbec6f87f4a958d2788d950287b .postImageUrl , .u7238dfbec6f87f4a958d2788d950287b .centered-text-area { min-height: 80px; position: relative; } .u7238dfbec6f87f4a958d2788d950287b , .u7238dfbec6f87f4a958d2788d950287b:hover , .u7238dfbec6f87f4a958d2788d950287b:visited , .u7238dfbec6f87f4a958d2788d950287b:active { border:0!important; } .u7238dfbec6f87f4a958d2788d950287b .clearfix:after { content: ""; display: table; clear: both; } .u7238dfbec6f87f4a958d2788d950287b { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u7238dfbec6f87f4a958d2788d950287b:active , .u7238dfbec6f87f4a958d2788d950287b:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u7238dfbec6f87f4a958d2788d950287b .centered-text-area { width: 100%; position: relative ; } .u7238dfbec6f87f4a958d2788d950287b .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u7238dfbec6f87f4a958d2788d950287b .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u7238dfbec6f87f4a958d2788d950287b .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u7238dfbec6f87f4a958d2788d950287b:hover .ctaButton { background-color: #34495E!important; } .u7238dfbec6f87f4a958d2788d950287b .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u7238dfbec6f87f4a958d2788d950287b .u7238dfbec6f87f4a958d2788d950287b-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u7238dfbec6f87f4a958d2788d950287b:after { content: ""; display: block; clear: both; } READ: Taming Of The Shrew (197 words) Essay We will write a custom essay on Taxation specifically for you for only $16.38 $13.9/page Order now

Modern Problems and Opportunities in our Society

Modern Problems and Opportunities in our Society Introduction In modern society, people are facing serious problems that have impacted negatively on their lives. These problems are social, economic or political problems (Davis, 2004). These problems have led to the deteriorating development in many countries of the world. The situation is severe in third world countries.Advertising We will write a custom essay sample on Modern Problems and Opportunities in our Society specifically for you for only $16.05 $11/page Learn More The problems have caused immense suffering to the people living in these counties and huge amounts of money are being used in addressing the problems. The outcome has been vicious circle of poverty amongst the several countries. Main problems; their prevalence and how they have affected the Society The societal problems encountered today may be either natural or artificial (Guba Lincoln, 1909). The most serious ones include poverty, diseases (cancer, HIV Aids, diabetes, malaria), child abuse and molestation, drug abuse, corruption and racial discrimination, inequality, economic problems such as unemployment, rapid population growth and infant mortality among others. Despite the fact that some efforts have been made to reduce these problems the rate at which they are being wiped out is very low. A disease like malaria is a serious killer especially in the tropical areas that has claimed the lives of many people including young children. The other dangerous diseases include cancer, diabetes and HIV aids which are incurable. The prevalence of such diseases bring with them other problems, for instance many orphans who are left by their parents become dependency and are burden to the society.Advertising Looking for essay on social sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More Problems like criminal injustices are very common in many countries and the most shocking thing is that they are perpetrated by the ones who should be against the virtue. There is no fair treatment and this has been strengthened by the increasing corruption. Discrimination is all over and people are being deprived of their rights. Discrimination leads to misallocation of resources and people perpetrate poverty among the disadvantaged groups in the societies (Guba Lincoln, 1909). Poverty is another major social problem that is threatening the lives of many civilians. It is estimated that almost more than a half of the world’s population is living below the poverty line. Child abuse and molestation has been on the increase. There has been several reported cases of rape amongst the young children, a major violation of human rights that is affecting the welfare of both the victims and those who take care of them. Drugs are being abused everyday life. Many youths’ lives are at stake due to misuse of drugs. Drugs abuse bring with them both social and economic costs. The economic costs are incurred in th e sense that rehabilitation expenses and other medical costs are incurred in tackling the drug abuse related cases. The social costs are on the user’s side since there is serious deterioration in one’s life. Rapid population growth is a demographic and social problem prevalent in developing nations. This leads to competition of the available resources and high dependency ratio in those countries. This condition has led to the emergence of other social problem due to limited social amenities. There has been an issue of gender violence among some families, a situation that has been difficult to handle.Advertising We will write a custom essay sample on Modern Problems and Opportunities in our Society specifically for you for only $16.05 $11/page Learn More Almost all the problems being faced in modern world are created by the human being himself and they are increasing at a very high rate thus compromising the betterment of human welfare (Guba L incoln, 1909). Opportunities arising as a result of the Societal Problems Every problem calls for a course of action (Goodman, 1984). In the process of addressing the above-mentioned problems, some opportunities are created for the people who are involved. International development groups are emerging out to assist the victims of poverty through provision of humanitarian aid. They require people to handle the tasks and subsequent creation of job opportunities for those handling the tasks. Problems like drug abuse are brought about by the psychological problems and therefore they call for peer counselors and appropriate advice to the victims. In addition, rehabilitation facilities need to be put in place to assist the victims. All these require well-established institutional frameworks that also require personnel and specialized facilities that need to be established. Consequently, there is creation of more employment opportunities. In a move to combat several cases of human rights v iolation and criminal injustice cases, there is greater need to maximize citizen’s welfare and enhance development in the society. There has been emergence of numerous advocacy and lobby groups to effect the desired change in the society. They are being led by human rights activists that want to see justice restored and the fundamental human rights are properly safeguarded (Davis, 2004). The efforts are also enhanced through international support whereby numerous opportunities are created and where people can share ideas and some job opportunities are created.Advertising Looking for essay on social sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More Conclusion The most serious problems facing the modern societies have contributed to backwardness, injustices and reduced democratic space. It has been noted that majority of the problems are caused by human beings themselves (Goodman, 1984). Though the problems come along with some opportunities, the damage they cause to the society is huge and appropriate measures need to be put in place to make the world a better place to live. References Davis, G. A. (2004). Creativity is forever. Atlanta: Hunt Publishing Company. Goodman, N. (1984). Of mind and other matters. Cambridge, M: Harvard University Press. Guba, E. Lincoln, Y. (1909). Fourth generation evaluation. Newbury Park, CA: Sage.