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dc.contributor.authorSikka, Prem
dc.contributor.authorMurphy, Richard
dc.date.accessioned2016-04-11T11:19:02Z
dc.date.available2016-04-11T11:19:02Z
dc.date.issued2015-04
dc.identifier.citationSikka, P. and Murphy, R. (2015) Unitary Taxation: Tax Base and the Role of Accounting. ICTD Working Paper 34. Brighton: IDS.en
dc.identifier.isbn978-1-78118-230-7
dc.identifier.urihttps://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/11172
dc.descriptiontax avoidance; accounting; transfer pricing; accounting standards; unitary taxation.en
dc.description.abstractFor more than twenty years there have been discussions on the issue of multinational corporations shifting profits from high- to low-tax jurisdictions, with resulting gains to them from the resulting reduction in their effective tax rate. Underpinning much of this debate has been an implicit assumption that, first of all, profits are a fixed and constant known factor in this tax base-shifting equation; and, secondly, that by adopting consistent international financial reporting standards (IFRSs) the risk of arbitraging on tax is removed from this equation. Arguments for unitary taxation have particularly advanced this assumption. We seek to show that the relationship between tax and financial reporting is now remote, and that no jurisdiction that we can identify relies upon unadjusted traditional accounting profit as a basis for the taxation of corporate income. This paper argues that this problem would, if anything, increase with dependence upon IFRSs, which serve entirely different purposes. IFRSs contain many subjective elements within their concepts of income and expenses, to provide the certainty that tax reporting requires. We draw instead upon the thinking underpinning the European Union’s (EU’s) Common Consolidated Corporate Tax Base (CCCTB), to suggest that tax-specific measures of income and expenses for taxation purposes need to be defined. Such a transactional approach provides a potential basis for developing unitary taxation and determining a taxation base that could then be apportioned to each jurisdiction. However, in the practical political context the EU needs to be sensitive to the interests of member states, which have an interest in adopting particular ways of dealing with deductibility of interest, royalty payments and allowances for capital expenditure. In order to secure political momentum for change, we suggest that for the time being such contentious matters be deferred by allowing relief on these items to be granted at a national level after apportionment of other income between participating states in a regional unitary tax system. The paper then makes some suggestions for the development of a conceptual framework for taxation accounting standards that could be used to address these issues.en
dc.description.sponsorshipDfID, NORAD.en
dc.language.isoenen
dc.publisherInstitute of Development Studiesen
dc.relation.ispartofseriesICTD Working Paper;34
dc.rightsUnitary Taxation: Tax Base and the Role of Accounting Prem Sikka and Richard Murphy ICTD Working Paper 34 First published by the Institute of Development Studies in April 2015 © Prem Sikka and Richard Murphy 2015 ISBN: 978-1-78118-230-7 The authors of this paper grant to the IDS and the ICTD a perpetual, irrevocable, worldwide, royalty-free, non- exclusive licence, or sublicence, to reproduce, communicate to the public, use, adapt, publish, distribute, display and transmit the Work in any and all media, and to sublicense others (including the Crown) to reproduce, communicate to the public, use, adapt, publish, distribute, display and transmit the Work in any and all media, for non-commercial purposes and with appropriate credit being given to the author and ICTD funders. A catalogue record for this publication is available from the British Library. This work has been licensed by the copyright holder for distribution in electronic format via any medium for the lifetime of the OpenDocs repository for the purpose of free access without charge and can be found at http://opendocs.ids.ac.uk/opendocs/. Also available from: International Centre for Tax and Development, Institute of Development Studies Brighton BN1 9RE, UK Tel: +44 (0) 1273 915637 Fax: +44 (0) 1273 621202 E-mail: info@ictd.ac Web: www.ictd.ac IDS is a charitable company limited by guarantee and registered in England (No. 877338)en
dc.rights.urihttp://www.ids.ac.uk/files/dmfile/IDSOpenDocsStandardTermsOfUse.pdfen
dc.subjectEconomic Developmenten
dc.titleUnitary Taxation: Tax Base and the Role of Accountingen
dc.typeIDS Working Paperen
dc.rights.holder© Prem Sikka and Richard Murphyen
dc.identifier.externalurihttp://www.ictd.ac/publication/2-working-papers/27-unitary-taxation-tax-base-and-the-role-of-accounting


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